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If you want to be debt-free, it’s possible! And if you’re reading this, then that means it’s for sure possible for you too. It may seem like an impossible task at first because living in debt can be like bondage or some sort of addiction, but this is your chance to get out of the hole and love every single step of the way even if you are on low income. Being debt-free is a great feeling so let’s start this journey and cut our expenses right now!
Here is a list of steps on how to be debt free
- Sell all the unnecessary things you have. You should sell your phone if you no longer can pay for it. If your parents want to help, they shouldn’t buy a new thing for you because that’s just gonna keep you from being debt-free faster. Do you have a television that you don’t even have the time to watch it? Anything that sits around the house without being useful should be sold.
- Cut down on eating out and spend only around $5 a day for food. This way, you will save money that would have been used to eat out at restaurants. Plus, buying groceries from the store is cheaper than eating out anyway, especially when buying in bulk or with coupons
- Cut down on smoking cigarettes by spending less money on them per week.
- Stop going shopping (if possible). Shopping does no good since you most likely only buy things you don’t really need.
- Increase your income. If you have time, get another job to enable you to earn more while keeping your expenses very low; that way, you can pay back your debt fast. I talked more about this below.
- Save money on gas by driving less, carpooling, biking more, or taking public transportation whenever possible.
- Continue working part-time jobs but stop accepting any sort of money that is not necessary for paying off debts or groceries
- Avoid credit cards at all costs! They are what lead to debt problems in the first place. It’s best to avoid them entirely. Make sure you are never tempted to make a purchase with one either because it would be even harder to pay off the debt if it were on a credit card making payments minimums each month rather than all at once.
Don’t let yourself fall for these bad habits. Your future self will thank you later for not needing to pay back ridiculous amounts of money in return for buying things you don’t need or want.
The biggest key to being debt-free is to spend less money on unnecessary things. If you can reduce your spending by a hundred dollars a month, you’ll have that much more money going towards loans or investments. For some people, this will mean no longer eating out three times a week or getting their haircut every two months instead of every month. It might also mean driving around in a car with dents on the side instead of parking it in the garage until it’s off warranty and you get hit with a gigantic repair bill. For other people it may mean having kids later in life so they don’t need daycare every single workday of the year, forgoing expensive holidays, or never buying clothes that aren’t on sale.
No matter what it is, there’s always something you can spend less money on and save more for debt repayment. But if necessary, these tips can guide you on how to be debt free on low income:
- Make a list of your monthly expenses and review them every month to see where the money goes. If you use Mint or any other budgeting software, it will do this automatically for you.
- Create a weekly or daily schedule of exactly how much of your income you’re going to put towards savings, retirement funds, debt repayment, etc. This way it won’t accidentally get spent on something non-essential.
- Change your mindset! It’s not about depriving yourself anymore – it’s about being content with everything you have. Think about it this way: there’s someone out there who would trade what you have right now (a house, your car, food in the fridge) for all of your debt. You can always make more money, but once the time is gone it’s gone forever. It took years to get into debt; don’t expect to be debt-free overnight. But if you’ve already made some changes and are living within your means, congratulations!
Making More Money
Once you’re spending less money on unnecessary things, what should you spend more money on other than paying back your debt? If you have some extra cash flow then investing or another type of savings account might be a good idea since they offer higher interest rates than regular checking accounts.
What happens when your debt is getting lower but your income is low? In that case, making more money by taking on side jobs or even quitting your full-time job to start your own business might be right for you. Even if you only make enough to pay off your debt in an extra three months or so, that would still be a huge accomplishment by itself!
Earn Extra Income with Side Jobs
If you need some extra cash flow, there are plenty of ways to earn money on the side. Airbnb is one option that allows people to rent out their unused space (e.g., bedrooms, couches) at different times throughout the year and earn extra income in the process – perfect for those who want a second stream of income but don’t have the time or money to start a new business from scratch. But be careful – if this turns into your primary source of revenue then you might have to pay tax on that money! Check with a local accountant or attorney if you’re unsure about how to proceed.
Start Your Own Business
If you have the time, talent, and just enough capital then starting your own business can be an excellent way of making more money faster. You can do so by offering some type of unique service that you’d likely already be doing anyways (e.g., tutoring students in math). Remember to keep track of everything though – it would be bad for your business if the IRS came knocking at your door asking for records. To avoid this, make sure to file taxes every quarter (assuming you run this as a side business rather than something like eBay) and if you end up having some money leftover (profit), then make sure to save it!