Paying Off Debt on a Small Income

Being in debt sucks! There is no nice way to say it. Many Americans are in debt because of loss wages, poor planning or just living beyond our means. Even if you are working with a small income it is possible to make your debt go down, with a little work and creative thinking. Before you know it you will get that feeling of accomplishment when you pay off just one of your creditors.

Start by being patient, since you did not rack up this debt over night, you will not be able to pay it off overnight either. Now you need to make a list of every creditor you owe. Use a notebook where you can list the creditor, mailing address and phone number, along with each payment you make. Facing that number is an important step and will also help you figure out where to start. This is so important, if you do not know who you owe money to, it is hard to pay them back.

Once you have a list of whom and what you owe, it is time to make a plan. It is important that you pay bills that costing you extra money in interest. If you can not make payments to all your creditors it is very important to contact them, as they make be able to work out a payment plan with you. The last thing you want is for companies to take you to court and place a judgment on you. Once a judgment is placed, the creditor can garnish your wages which will make your income even less for weeks or years.

If you are able to make the minimum payments on all your bills continue to do so. Then pick the bill that is costing you either the most interest or will be the quickest to pay off. This is where all your extra money is going. Trust me there is extra money out there, even if you do not see it at the moment. Contact the creditor you have chosen to pay off first. Ask them if they can either cut your interest rate or if they will reduce the bill if you have it paid in full on an agreed date.

It is now time to find the extra money to get that bill paid off by either the agreed date or sooner. Look at all your expenses, is there a place where you can shave ten or twenty dollars off a month. Just cutting back on groceries, using coupons and store sales when you shop will save you money. Take the twenty dollars or more that you save on food each month and apply it to the creditor you are paying off. Find items in your home that you are no longer using, clothes or shoes your children have outgrown and sell them either through craigslist, Ebay or a consignment store. All these little items can add up to big money in getting the bill paid off. Stop the morning coffee run or eating out at lunch, each of these is another five dollars or more towards the bill you are paying off.

Continuing to find small holes in your budget and applying that money to your creditor will have your bill paid off in no time. Do not wait till you have a lump sum to send them. Even if it is only an extra ten dollars mail off the payment right away. This will stop you from spending the money on other things that you think you may need. Keep a record of all your payments and slowly watch the balance disappear. Once you begin to make these extra payments, you will feel that you can accomplish paying off your debt even if you have a small income. Before you know it one bill will be paid off and you will be moving on the second bill.