Have a Low Income? You Can Still Get Out of Debt.

Here’s another great post by Rachel Foxwell, the newest writer for Money is not Taboo. You may already know of Rachel from her own blog, The Latte Budget, as well as her writing for David Carlson’s Young Adult Money. If you do, then you know she has great info to share. If you don’t already know of Rachel, then you are in for a treat. Grab a beverage, a snack, or both, and dive into her latest post at MinT. Shin

   Rachel Foxwell, The Latte Budget

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Paying off debt is hard, no matter how much you make. But how about paying off debt when you have an especially low income?

Living with debt with a small income can be a challenge. If this is you, your months are likely filled with fear on how you will pay for everything. Maybe you’re only able to pay the minimum towards debt and feel like you aren’t making any progress. Or maybe you aren’t able to pay anything towards debt.

It isn’t easy, but you CAN pay off debt, even on a small income.

Why You Need to Get Out of Debt

Even the idea of being debt-free may seem impossible. You might not feel like you have any extra money, and that you only have enough money to meet your most basic needs.

But be honest with yourself. Are you really doing everything you can be doing? Are you focused on your goals?

Can you imagine what you would do without debt? Maybe buy a new home, start saving for the future, or travel more. Whatever your vision is, use this as motivation. Because being debt-free is possible, and the only way you can have the future you want is to eliminate all of your debt.

Create a Plan of Attack

You can’t pay off debt without being committed to a plan. Discuss with your partner or someone for accountability to discuss the best course of action.

There are two ways to look at paying off debt. One is called the “Debt Snowball” method. This is where you pay off your smallest debt first. This might seem odd, but the key here is to build your motivation. Once you pay off a small debt, you keep paying that amount to your next debt. You continue to build the “snowball” until you are debt-free!

This tactic works well for anyone who might consider themselves a spender or are tempted to spend money on anything other than debt. The snowball method keeps you focused and attentive, and gives you a huge sense of accomplishment.

The other method is the “Debt Avalanche” method. This is where you pay off your highest interest debt first, and continue paying off your debt in succeeding order.

Mathematically, the debt avalanche method makes most sense. You are saving more money on interest versus the debt snowball. However, many people report having much success with the debt snowball method because it pushes them to keep going to see which debt they can pay off next.

Either way, both methods are effective, so figure out which method works for you and stick to it!

Evaluate Your Budget

No matter how tight you feel like your budget is, there likely is still room for improvement. We all have things we can improve in our budget, and even cutting $5 out of a budget can really help the debt repayment process.

Take a deep look at your budget. How can you lower your food expenses? Clip coupons? Switch grocery stores? Can you cut out cable or turn down the thermostat to save on utilities?

This is not a fun process, but remember your goal. Living below your means now allows you to live the way you want in the future.

Reconsider Your Housing

Housing is likely your most expensive bill. Consider to see if there is anyway you can lower your housing expenses.

This may be difficult if you’re locked into a mortgage, but you can always consider refinancing to obtain a lower rate.

If you’re in an apartment, think about moving to a less-expensive complex temporarily. You could save hundreds of dollars every month by simply moving to a more affordable apartment. Remember, this is only temporary!

Save for Emergencies

This might seem contrary, but it is important to have some money set aside for emergencies while you are paying off debt.

Without any monetary backup, you could ruin all of your hard work if an emergency comes up. Emergencies happen, and are never convenient. If you don’t have anything set aside, a small car repair could cost you big time.

And even worse, many people who are progressing in paying off debt but who don’t have an emergency fund find themselves falling into old habits when an emergency happens. Without any emergency plan in place, people are often forced to put an emergency expense on credit, and furthering themselves in debt.

So prioritize starting a small emergency fund. Even $1,000 is adequate to cover you in most minor emergencies.

Dedicate All Unplanned Money to Debt

Commit to throwing all extra, unplanned money towards debt. Any bonuses, extra paychecks, tax returns, or gifts should be put towards debt automatically. Putting large lump sums towards debt can greatly speed up the debt repayment process.

Give Up All Luxuries

Again, this isn’t a fun part, but it is a short-term lifestyle you must adapt in order to become debt-free. Consider any luxury expenses you have and eliminate ALL of them.

This includes haircuts and colors, extra clothing, hobbies, trips, or any other unnecessary expenses you may have. The goal here is to live as minimal as possible for a short time. Not only does this allow you to put extra money towards debt, but living at a minimum puts a sense of urgency on the debt repayment process.

Doing this will allow you to pay off debt more quickly and it will show you how much you are spending on wants versus needs. You may be surprised by how much money you save by cutting out luxury purchases.

Sell Items

Take a look around. Do you have extra “stuff” lying around? Anything you’ve been meaning to get rid of?

We all have more stuff than we need. Adopt a minimalistic lifestyle and try selling these items on Craigslist, OfferUp, and different Facebook trade groups. You might be surprised by what people will pay for.

In the past, I sold a vacuum cleaner, lamp, fish tank, and an old couch and ended up getting over $1000 for all of it. I didn’t think any of these items would originally sell, but I’m so glad that I tried!

Make More Money

Lastly, if you’re trying to get out of debt on a small income, don’t forget about trying to make more money.

People tend to think that their current salary dictates what they can earn. If you feel limited by your salary, then now is the time to focus on making more money. You can make more money by asking for a raise, looking for a higher-paying job, or starting a side hustle like freelance writing, blogging, or other. There are so many ways to make more money, so you should never feel limited by your current income.


Paying off debt is a hard process, but it can be done. Once you go “all in” and commit to the debt repayment process, utilize these tips to get out of debt completely.

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About Rachel

Rachel is a writer who is passionate about teaching millennials about money management. Rachel graduated college with $28,000 of student loans, which she is working furiously to pay off. To document her journey in finding financial freedom, Rachel created The Latte Budget, a personal finance blog.
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