Paying down or paying off your credit card debt can seem like a daunting, impossible task when you have limited income. However, it is one of the most important things you can do to ensure your own peace of mind and security for the future. Although most people would jump at the chance to pay down debt, they don’t know where to start or how to go about doing it.
Like many Americans, you probably earned a pretty good income a few years ago, especially if you had a two-income household. And, you likely earned enough to pay off your credit card balance in full at the end of each month. Unfortunately, over the last decade, Americans have increased their credit card debt without equal increases in their incomes or after losing their jobs. Many people are now trying to adjust their lifestyles and their priorities to a low-income budget in order to pay off debt they can no longer afford to carry.
If you have been trying to reduce your debt, you can do it by reducing your spending, increasing your income and using secured credit cards to reduce the amount of interest, fees and costs you pay to credit card companies and as a vehicle for saving money.
Start With Making One Lifestyle Change From This List
You can and should get out of debt, even if you don’t think it is possible. You can do it even if you are already living frugally. Here are some ideas about where to start and get the momentum going:
It does not matter if it is one or five dollars per month. You will get into the habit of putting it away and will learn not to touch it except in an emergency situation. Set a goal of saving $500-$1000 in your first year while you pay off your debt. And, keep it in a savings account or on a secured credit card. Many families even go back to the old-fashioned method of putting every spare coin they find in a glass jar or an empty coffee can.
Eat Dinner at Home
Going out all the time is expensive and takes as much time as it does to prepare dinner at home. You’ll be saving a lot of money and will be eating healthier. It’s even trendy now to meet friends at your house or your friend’s house. Make light and healthy small plates and snacks instead of a full meal and have everyone bring something.
Sell Your Belongings
With the number of vintage and second-hand stores popping up everywhere, see what you can pull together to sell on consignment or online. The key to not-overwhelming yourself is to start in one room of your house. Gather just a few things that you really don’t need and bring them to a consignment shop nearby. You’ll start to understand how the process of consignment works. Even if you only get a few dollars back, it is better than nothing. Make a commitment to put every penny of your sales toward paying down your debt.
Negotiate with Your Lenders
Lenders will usually arrange to give you a smaller payment at a reduced rate of interest for a set period of time. Most lenders are willing to help you if you are upfront about your situation and make a good faith effort to pay off the debt.
Get a Secured Credit Card
A secured credit card can help you stay on budget, save money and rebuild your credit score for the future.
Pay Down Debt
Look at what you are spending money on and decide what are necessities and luxuries. Having a full slate of extra television channels can be very expensive. Even though having water, electric and gas utility services is a necessity, see how you can reduce these bills by using power in the evenings instead of peak-cost daytime hours. Wash and dry clothes in the evenings when power is cheaper. Always turn off lights in rooms you are not in. Look for water-saving faucets and shower heads at thrift stores.
Downsize Your Home
You’ll need to weigh whether the commute time to your job will increase and what this will do to your fuel budget. You’ll also save money if you can lower your mortgage payments and housing expenses like insurance, utilities and maintenance. If you are renting, start looking for less expensive options several months in advance of your lease-end date.
Work From Home
While no one is saying that it is easy to work at home with a toddler running around, if you can cut out one commute per week, you can save on fuel and car maintenance expenses.
Plan Meals Ahead of Time
Shop for groceries in bulk and bring your own lunches to work.
Get a Second Job
Focus on your interests and experience to figure out how you can earn extra income at home or at a second job.
Conduct A Financial Reality Check
Everyone needs a financial reality check once in a while. It helps to know where you really do spend money. While you want to believe what society tells you, that you “deserve” a certain lifestyle, this is a marketing ploy to get you buy more things that you don’t need and can’t afford.
It puts too much pressure on you to keep up with the fictitious “Joneses” next door. Ignore what the media tells you and block out the message that you deserve this or that luxury. When you are deep in debt, the best luxury gift you can give yourself is a debt-free future.