America is a nation in debt. On average, 46% of the U.S. population spends more than they actually earn each month. This means that credit cards and loans are being used to bridge the gap.
Therefore, it’s no wonder that many Americans choose to turn a blind eye to their debt, rather than face it head-on. To add to this, there are also thousands of people who do not have the means or income to pay off their debt – so what is there left to do?
If you’re in dire straits when it comes to paying off debt with a small or non-existent income, these tips should help…
Simple Strategies for Paying Off Debt with Little to No Income
The reality is that debt can destroy any dreams you’ve ever had about financial freedom. Whether it’s a small credit card balance or a massive student loan, debt makes it almost impossible to get ahead in life.
But take comfort in knowing that you are not alone when it comes to debt and that it is possible to dig yourself out of a financial hole.
Even if you have no present means of income or struggle to find extra cash for paying off debt, these strategies are a good place to start:
1. Meet the Minimum Payment and More
The reality is this: simply meeting your minimum payment requirement on your credit card is sometimes not actually enough to pay it off. In fact, it only digs your hole of debt a little deeper each month.
This doesn’t only apply to credit card debt either. It’s relevant to personal loans and student loans, too. The key is to make your minimum payment and add a little more on top of that where you can.
Not only will this save on the interest throughout the course of your loan, but it also speeds up the payoff process.
2. Monetize Your Talent or Skill
You’ve most likely heard of the term ”side hustle” by now. This a great way to pay off your debt and amplify your efforts in keeping your debt to a minimum.
Even if you have a full-time job, think about a certain skill or talent you could turn into a side hustle and monetize. With the ease and convenience of the internet, nearly anyone can find work online.
Sites such as Upwork and TaskRabbit are a great go-to for online opportunities. Any money you make on the side you can bank right away and contribute towards your debt repayment.
3. Stick to a Bare Bones Budget
If you’re dead serious about paying off a mountain of debt, then you really need to reassess your lifestyle and your living expenses. This is where a bare-bones budget is essential to live by.
Essentially, you need to cut your expenses to low as possible and live on as little as possible, for as long as you can manage.
Keep in mind that a bare-bones budget is different from one person to the next. But basically, you should cut out any extras that you could actually live without. This includes cable TV, ordering Uber Eats for the convenience, and expensive habits such as smoking and drinking. This extra money can be contributed to your debt.
4. Sell Everything That’s Unnecessary
If you’re looking to make a bit of cash in a dash, then do a stock-take of your belongings and determine what you really need, and what you don’t.
You may need to be brutal for this task, but most people tend to collect clutter that they don’t really need. So, why not sell this unnecessary stuff and use the funds to pay off your debt?
Consider hosting a yard sale, sell on Facebook groups, or sell to your local consignment store.
5. Secure a Seasonal Job
The holidays are always a great time to pick up a seasonal/part-time job and make a bit of extra income. Retailers are on the lookout for flexible, seasonal workers over prominent holidays such as Thanksgiving, and the Christmas season especially. Otherwise, seasonal jobs are also available year-round outside of the holidays.
If you’re willing to commit to some seasonal work you can use this extra cash to contribute to your debt.
6. Re-Negotiate Your Credit Card Interest Rates
The truth is that some credit card interest rates are so high you may never make any leeway on paying off debt. Especially if you’re strapped for income.
This is why it’s worth contacting your bank to re-negotiate the interest rate on your credit card. Believe it or not, this is far more common than you think. And if you have a good credit track record, your bank is more likely to offer you a lower rate.
7. Use Unexpected Income to Pay Off Debt
What do we mean by unexpected income? This includes a quarterly bonus at work, an annual raise, or even an inheritance or tax rebate.
Whatever type of ”found money” you receive, make the effort to contribute at least three-quarters of it to your debt.
8. Cut Down on Expensive Habits
Cutting down on your expensive habits can make a huge difference to your available income every month.
It’s important to ”get real” and take stock of your spending habits. Go through your monthly bank statement and take a look at what you really spend your money on- even the smallest amounts. Then, assess whether those purchases were really worth it and what you can out or minimize.
9. Negotiate on Loan Repayment Terms
If you find yourself in a tough position with your monthly earnings, simply speak to your lender about it. They are human too and often willing to hear you out, especially if you have a good repayment record.
Ask your lender whether they’d be willing to re-negotiate on these three items:
- Lowering the loan repayment amount each month
- Extending the repayment timeline of the loan i.e. from five to 15 years
- If you’re currently unemployed, what will happen if you can’t pay the loan for at least three months
If your lender has an answer to all of the above questions, they will most likely help you restructure your loan repayment.
Looking to Sell Your Home in a Hurry?
If you’re looking to sell your home as a means of paying off debt and an expensive mortgage, Lisa Buys Austin Houses is here to help!
We buy houses in any condition and in any situation- learn more about how our service could benefit you if you live in the Austin area…