How to Tackle Debt with Limited Income

When you're on a strict budget, it can be difficult to get rid of your debt. If you're only making minimum payments on your credit cards, it can take years to pay them off. If you want to tackle debt with limited income, you have to make a serious commitment. You might have to do without some extras for a while, but the benefits of being debt-free can far outweigh the sacrifices.

Difficulty:

Moderately Challenging

Instructions

1. Lower your interest rates. If you can decrease your interest rates, a higher percentage of your monthly payment will go toward the principal balance. This will help you to pay off your debt faster, even if you're making the same payment. Contact your credit card and loan companies and ask them to reduce the interest rates. You might have to threaten to move the balance elsewhere to encourage them to do this.

2. Consolidate your debt. In debt consolidation, you take out one big loan that pays off all the smaller loans. Then, you only have to pay one bill each month, often lowering the total monthly payment and making it easier to pay off your debt with limited resources. Consolidating your debt also can lower the interest rate. Talk to a debt consolidation company, but be wary of extra charges just to do the consolidation.

3. Pay more than the minimum payment. If you are making only the minimum payment monthly, you are paying mostly interest and hardly touching your principal balance. Apply as much as you can toward lowering your debts. If you can only afford an extra $20 per month, it's still better than nothing.

4. Sell things that you do not need. Selling items that you have around your home can be a quick way to get a bit of extra money to pay off debt. Look for gadgets that you don't use and hold a garage sale. Bigger-ticket items, such as antiques or electronics, might sell better online.

5. Look for ways to increase your income. Trying to pay off your debt with a low income is difficult, but if you can find ways to earn extra money, you'll be in a better position to pay things off quickly. Look for a part-time job or do some freelance work in your spare time.

References

• The Motley Fool: 9 Ways to Pay Off Debt