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How to Pay Off Debt Fast with a Low Income


I f you’re deep in debt and living on a low income, you might be tentatively hopeful to find an article about How to Pay Off Debt Fast with a Low Income, but deep down you’re probably thinking it seems too good to be true. Maybe it’s possible for other people, but not for you.

Well, that is exactly what I said while reading another family’s debt free story several years ago. The idea of living debt free was intriguing, but there was no way we could do it!

I’m so happy to tell you that I was wrong! Though we were living on a low income with two small children at home, not only did we pay off our $22,000 of student loan debt, but we did it in less than 9 months!

In this post, I’ll share in detail the steps you need to take right now to get out of debt fast. From how to get out of debt even if you don’t think it’s possible, make a better budget, save money even when you’re already living frugally, and find ways to earn extra money to throw at your debt. You’ll also be inspired by real-life examples of real families who are paying off their debt fast, even on a low income.

Since sharing our debt free story. I have gotten some pretty discouraged comments from those who read our story. I so totally feel for these individuals because I too was in their place not so long ago: deep in debt, low on funds, and not believing that I could do anything to change my situation.

I think Sarah’s comment captures it perfectly.

“I see people say they can do this…but typically it’s only if you have something large you can sell, like your car or a house. Not for normal people.

Or this reader that said, (I preserved the typos, by the way.)

“so you are saying let’s say $1,857.24 a month income. i should be able to get out of debt. im still not convince. please enlighten me”

So here I am, to convince you that not only can you get out of debt fast on a low income, but also that you must. My question isn’t whether you can get out of debt, but how can you not? Here’s why.

Why You Need to Get Out of Debt on a Low Income

If you are like we were, and living on a tight budget, you’re probably wondering how you can possibly start moving toward your goal of financial freedom.  Before we started this journey, we really didn’t have any extra and were just barely making ends meet at best. The worst part of it was, we didn’t even have a good enough grasp on our finances to know just how tight things were!

When my husband and I finally wiped all the mud off the windshield of our budget and took a really honest look  at our financial situation, we were both a little shocked.

We had dreamed of a comfortable middle class life where I stayed home with our kids and he went to work. We might travel a little to see family and show our kids the world. Nothing extravagant. It doesn’t seem too much to ask does it?

Needless to say, what we envisioned didn’t look anything like our reality, yet, that’s where we were when our eyes were opened to our true financial situation.

In that moment, there were two paths laid out before us.

Now, we could have stayed and raised our two kids in our rented single-wide from 1960-something. And you know what, it would have been a blessed life. (Though I’m not sure we would have ever learned as much contentment had we not gone through this crazy journey to debt free.)

We could have accepted our extremely tight budget for what it was, an endless struggle just to live within our means, and eventually going further in debt to cover emergency expenses. We might have thrown our hands up and said that getting out of debt was going to take a decade at least. (Ok, I may have done that at first.)

But it would have meant turning our back on that other path. The one that held all our biggest dreams for our family. The one where we could do more than just subsist.

That second path was the one where we build a small house that meets our needs. The one where we move to live closer to family. The one where we travel with our kids and show them the world. The one where we can feel not-totally-crazy for adding more kids to our family.

As we’ve been on this journey, I have come to believe to my core that being debt free is crucial for every family in order to have a positive financial future.

So in answer to the dubious commenters above, yes, even more than I am saying that anyone can pay off debt on any income, I’m saying that you have to find a way.

If you don’t, what does your financial future look like? More debt? Constant financial stress? Strained family relationships?

Because the real problem here isn’t how much you owe or how low your income us. The real problem is the big dreams you’re giving up every minute you stay in the vicious cycle of debt.

How to Pay Off Debt Fast with a Low Income

So now that we know you need to get out of debt as fast as possible, how do you do it?

In what follows, you’ll learn how to get out of debt even if you don’t think it’s possible, make a budget you can actually stick to, save money even when you’re already living frugally, and find ways to earn extra money on the side even when you’re busy, sick, tired, and don’t have a car.

You’ll also be inspired by more debt free stories of real families who are paying off their debt fast, even on a low income.

But before of any of that, what you really need to get started is a total paradigm shift…

Step 1: Get Real

Let’s take a quick look at what low income really means. According to a US Census report a low income household was defined as twice the federal poverty line.  When my family of four began our journey to debt free in 2013, the low income threshold was $47,248, though we made a good bit less than that at the time. (sources: 1  , 2. 3 )

Here are a few more stats to satisfy my love for data and your curiosity about what the definition of low income really is. (The stats below assume a two-parent household. Source )

Low Income Definitions as of 2014 –

  • 3 person family – $38,110
  • 4 person family – $48,016
  • 5 person family – $56,504
  • 6 person family – $63,266
  • 7 person family – $70,862
  • 8 person family – $77,906
  • 9+ person family – $95,202

Surprised? If you’re like I was when I first started researching the topic of family finance, you might be surprised that you do indeed fall into the category of low income.

You might even have a masters degree and a professional career and still not be making enough to quite stick your head out into the light of the fabled middle class of America.

Before we started down this path, we did not identify ourselves as low income, and our ideas about the type of life we ‘deserved’ reflected it. Our expectations for life weren’t matching up with the realities of our budget.

The first step to getting out of debt is to get real about your financial situation. If you’re living in debt and on a low income, you’re in a very precarious financial situation. If you don’t do something now to change it, it isn’t going to change!

Please don’t miss my point here because this, rather than even the most extreme money saving measure, was the key to us getting out of debt fast.

Once we looked around at our true financial reality, we finally let go of our 2-year long pity party and started seeing our debt as a challenge that we could, and should. tackle. That’s when we started making real progress.

We stopped asking “why is this so hard?” and started asking “how can we meet the challenge before us?”

We finally let go of the entitled belief that anyone who earned a college degree could get married, buy a house, have 2 kids, and otherwise afford a comfortable middle class lifestyle. Unfortunately, that just isn’t reality as long as you are paying hundreds in debt every month.

Maybe it might be time for you to have a bit of a reality check, too. Do you like what you see when you look honestly at your current financial situation? Is this the life you dreamed of living?

If it feels like it’s been so hard just to make ends meet, that’s because it is, and it’s time to make a change.

More Resources for your Financial Reality Check:

Step 2: Learn to Budget

I have already written a ton about how to get on a budget and actually stick to it, so I’ll give you the basics, and then be sure to join our free Family Budget Challenge  for everything you need to know to apply each tip.

First, embrace the Debt Snowball Method and find your debt pay off date with the Debt Snowball Calculator. Post it on the refrigerator for all to see. Tell everyone you know you are going to get out of debt.

Having a very specific goal, with all the steps in your debt snowball listed and a date that you’re going to reach it by, plus the accountability of all your friends and family cheering you on, can be very motivating!

Next, you need to create a new and improved budget. Prior to beginning our debt free journey, we had been trying to stay on a budget for years, but it never worked. Though we lived frugally, all the pennies we pinched went right back out again.

Once we learned about and implemented a Zero Sum Budget, including about 3 dozen sinking funds, everything changed. We finally succeeded in sticking to a budget every month!

These were such subtle changes to what we were already doing, but they each had dramatic results. You can find everything you need to know to do it yourself in the links below.

More Resources About Better Budgeting:

Step 3: Save Money, Even on a Low Income

By now, most of the people who started reading this post have already run in the opposite direction, because this is where it starts to get tough.  I wouldn’t be doing you any favors if I told you this was going to be easy. This is where it’s good to remind yourself of why you want to get out of debt.

If you’re really serious about getting out of debt, you’re going to have to squeeze ever-lovin’ cent out of your no-money budget and just pray you can reach your goal before you go totally crazy. (Or in my case, before I completely drove my husband crazy!)

We did absolutely everything we could to save money, even to the point that I’m sure people around us started to think we indeed had gone little crazy.

You’re going to have to get serious  about distinguishing your wants from your needs. You can see from our debt free budget percentage breakdown. we spent almost nothing on clothes, entertainment, or household items while we were getting out of debt (and we still don’t).

While we were working on getting out of debt, I always used to think about that documentary Babies that followed the first year in the life of babies across the world. If those mamas living in a hut in Namibia or Mongolia could live without it, then surely I could too. (Except for using a corn cob instead of baby

wipes. I draw the line there!)

To get out of debt fast, get ready to buy nothing. I mean nothin’. 

Be sure to check out the links below for all the crazy ways we found to save money, even on a low income. We took the quick but painful ‘rip off the band aid’ approach and reminded ourselves that there was a near-future where things wouldn’t be so tight.

Now that we’re on the other side, I can tell you, it was hard. but it was worth it!

More Resources About Saving Money:

Step 4: What to Do When Saving Money Isn’t Enough

I know what you’re thinking. No matter how much I save, it’s not going to be enough to get me out of debt, let alone fast.

Well, you’re right. There’s no magic in it. You know as well as I do no one is paying off $20-$30,000 in debt in just a few months on an income of $30-40,000 a year.

Everyone is always looking for ways to save money, but saving money really isn’t enough. You may start out with a low income, but if you’re going to get out of debt fast, you’re going to have to hustle and find a way to earn more on the side.

Let me say it again. If you’re living on a low income, you probably can’t save your way out of debt. Especially if you’re trying to do it fast. This is an important point that I think is often missed.

At some point there was a limit where we just couldn’t save any more. This was a really important realization to make.

When I was a naive teen, I remember telling my dad I didn’t care about money. I didn’t want it, didn’t need it. I was way too “deep” for that, and I’ve never liked to shop anyway.

Of course, he wisely corrected me that while I may not care to be rich, everyone does need money. As I’ve grown older, I’ve come to see how very true this advice is.

While it’s true that I’m perfectly happy going to the thrift store as opposed to the mall, or better yet no store, even simple living costs money.

On our low income we never could have afforded (and in fact we still struggle to afford) the accouterments of simple living.

I want to feed my family healthy, organic fruits and vegetables and grassfed meat and dairy. While I have learned to do so on a budget. these healthy foods still do come at a premium compared to conventional alternatives.

If we want to make building community a goal by sharing meals with friends and family, up goes the grocery budget even more.

If we want to take our children hiking or rocking climbing, there’s all kinds of gear needed for that from harnesses to climbing shoes. And guess what, they’re always out growing it! Even if you always buy used, it still ads up.

And if I want to give to those who are truly in much more need than myself, well, that giving is going to be much more limited if I continue to live on a low income.

It might be something different for you. Maybe you want to see your kids play soccer or take gymnastics, or play the piano. Just see the dollar signs fly!

Not only is saving money not enough, but if you’re honest, I think you’ll agree with me that living on a low income long term isn’t any fun.

Despite my naive beginnings it really does take a decent amount of money to live in this country, and I want you to reach your big dreams. Not just being debt free, although that is absolutely the best first step you can take, but also all that you dream of giving to your family, your community, and the world.

I find that many of the most discouraged readers report to me that they can’t get out of debt because they have a low income, as if being broke was the same as being short or tall, male or female. In this wonderful age of the internet, that is simply not the case.

There are limitless legitimate possibilities available for earning more if only you’re willing to let go of the low-income label, work hard, and be creative.

I think this quote sums it up well.

“Poor is a state of mind. Broke is, ‘I’m just passing through.'” -Dave Ramsey

If you tell me you can’t get out of debt because you have a low income, I’ll tell you that you’re probably right.

However, if you tell me you are going to get out of debt, and you’re starting  with a low income. Well, then we’re getting somewhere!

It’s time to amp up your too-low income and find a way to earn more cash to throw at your debt!

Selling Your Stuff to Pay Off Debt

One great way to earn cash fast is to sell anything remotely of value that isn’t absolutely necessary.

We did not have anything of big value like a house or car to sell in order to help us get out of debt. But you better believe if we had, I would have sold it!

If you have a second or third car, seriously consider what it would take for you to be a one car family, at least for awhile. If you have many years of a car payment ahead, what would it take to get rid of it and pay cash for a clunker?

Even if you don’t have anything of significant value, small things can still add up fast.

A favorite Dave Ramsey quote one of my readers pointed out to me was to sell so much of your stuff to get cash quick to “make the kids think they’re next”!”

Earning Side Income to Pay Off Debt

After you’ve sold everything possible, except the kids of course, it’s time to start looking at how to earn some extra income aside from your regular paycheck.

Dave Ramsey’s books are filled with stories of people simply getting second jobs delivering pizzas. Of course, that isn’t the only way to earn more money.

In some small way, starting with a low income when trying to get out of debt is actually a blessing.

When confronted with our debt, so out of proportion from the income we are bringing in, it can drive us to even greater resourcefulness to find ways to save and earn more.

By having the extra challenge of living on a low income in front of us, it motivates us to shoot for the moon.

I love the story of the blue collar worker who just wanted to get out of debt and ended up earning a full-time income simply by writing honestly about his life and struggles. (Hear his story here. )

When we were working to get out of debt I did absolutely everything I could to harness my interests and experience to earn extra income.

As a stay at home mom of a newborn and toddler, I didn’t have a lot of extra time or energy, but I gave up whatever free time and sleep I did have to work on my blog, ebooks, Etsy shop, and a couple of freelance projects anytime the kids were asleep.

When we were about 6 months into our journey, I was blessed with the opportunity to earn enough to finish off our debt completely. The only problem was, it would mean temporarily giving up my dream of being a stay at home mom. putting my oldest in daycare 3-days a week, and commuting two hours per day.

We carefully weighed the costs as a family and decided to go for it, despite my obvious reservations. It was undoubtedly the hardest 6 months of my life, but it was also an amazing blessing to be able to wipe out our debt so quickly, and it’s led to many good things for our family both financially and for our overall well-being.

If you’re life is anything like mine was, finding the time and energy to make extra income is not going to be easy. As you work your debt free plan, you aren’t going to be binge-watching whole seasons of Downton Abbey, taking up knitting, or rereading the Harry Potter series. Yes, life is pretty much going to be all  about getting out of debt, but you can do it!

Stories of real everyday people are so inspiring to me, so I decided to interview 60 real moms about how they make an income from home. I was amazed by the variety of ways stay at home moms are making legitimate incomes at home! (You can read their advice to help you work from home here. )

No matter your education or background or career, you have skills, talents, and passions that make you uniquely able to help someone else fill a need in their life and get paid for it. You might simply watch a friend’s child while she’s at work, teach piano lessons, or start a blog. You might even be extra supportive of your husband as he gets a second job.

Now’s the time to get creative to look for ways to earn more money on the side to help you get out of debt fast!

More Resources About Earning More:

How to Pay Off Debt Fast With a Low Income

When you first started reading this post, you might have believed deep down that debt free living is for other people but not for you. This belief was really the only thing that was holding you back from getting out of debt.

But I hope at some point along the way you came to the realization that you can’t stay where you are right now without giving up some of your biggest dreams and that in reality (as in the opposite of denial you may have been living in until now) you have to make a change.

You now have all the tools at your fingertips to learn to make a better budget, get crazy with saving money, and earning more money to throw at your debt.

Now I want to leave you with a couple more stories to get you even more convinced that you can pay off your debt fast even if you’re starting out with a low income.

You can read the whole story of how we paid off $22,047 in less than 9 months here. But don’t just take it from me. There are many stories of families paying off debt fast, even when they start out living on a low income.

“I just finished [Dave Ramsey’s baby] Step One today. It took only 2 months as a single mother making 35,000 a year. I’d been trying to budget for years. It never clicked until I got on a cash budget.” –Brittney M. GrowingSlower reader

Fellow blogger, Stephanie and her family are tackling $143,963 of student loan debt. In fact in 2013 they paid off $36,000 in just one year  on one low income!

Misty, another GrowingSlower reader says this,

“Being debt free can be done! We are almost there (we have around 4K left) and paid off 32K in less than 2 years WITH unemployment. The key is wanting to do it, and then making it happen (just like Shannon said). I think the discouragement comes from people not realizing it takes only one step. Just one to make a difference. It seems so out of reach, but in reality it’s not. I really think it is a matter of a few small changes adding up over time. “

Are you ready to get started? I would love to have you sign up for the Family Budget Challenge  that’s going on right now. I’m going step by step exactly how to create financial goals, a budget, and achieve your goals all year long.

Where are you in your journey to debt free? Share your story in the comments!

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