How to Tackle Debt While Living Paycheck to Paycheck: Three Easy Tips to Start Chipping Away at the Stone

Beginning to tackle debt can be challenging. You may have questions like, where do I begin? How did I get into this much debt? I live paycheck to paycheck so how can I pay off debt? Well, to begin paying off debt, you have to start with the basics. Save...Then...Pay. Here are a few steps to get you started on the right track.

1. Remember to save first. At least save $500-1,000. Why? Because you need some type of cushion in case of emergencies. Saving the recommended 6 months worth of living expenses can be extremely challenging for the individual who lives paycheck to paycheck as the money just is not there. So, lets move to a realistic step, start small and create a "starter cushion". What does this mean? Well, oftentimes debt is incurred due to unexpected expenses such as car or home repairs and medical expenses. In reality, many people do not have an accessible transit system like many of the major metropolitan areas, so a vehicle is necessary. Therefore, you need to make sure your car is in running condition so you can make it to work. Or, what if you have difficulty with your oil heater in the home? Well, that would be a priority especially during winter months. Also, medical expenses are often unexpected as the human body tends to present quite a few challenges. So, in order to decrease the chances of gaining more debt have a "starter cushion" to help cover those unexpected expenses. Now, this cushion may not cover the entire expense but it is helpful to know it is there.

2. It is time to pay. Many people may have debt across two credit cards or even a loan. It may be beneficial to start paying off the credit card with the least debt first. Yes, oftentimes it is recommended to pay off the card with the highest interest rate yet seeing what appears to be a lack of progress can be quite discouraging. So, start chipping away at the lowest account balance first and then transition to the next one. This may help you to have a sense of accomplishment and less debt.

3. Finally, watch your spending. Your goal is to no longer add debt so you may need to avoid your favorite clothing or electronics store until you are in a place to begin making "fun" purchases again.

Overall, take time to begin your starter cushion in case of emergencies. Next, begin to pay off one credit card at a time while definitely making at least the minimum payment on all balances. Finally, make sure your spending is necessary during this period of transition. Stay focused and hopefully you will achieve your financial goals.