This is a guest contribution from Andy of Penny Less Dad. He’s here to give you some simple things to consider if you’re looking to pay down your debt on a modest income!

Life would be a whole lot of easier if we didn’t have to fulfill our obligations. Debt is such an obligation that we can’t escape. It can be intimidating, but having a plan is crucial to getting out of debt on a modest income.

It can be scary when you don’t have enough money to throw towards your debts, especially since they grow by leaps and bounds upon nonpayment. Things can be equally frustrating when you have tons of debt, and a large amount of your hard earned money goes towards just interest.

It’s wise to make small payments against your debt, rather than no payment at all. If you can’t boast of having a satisfactory emergency fund, and can’t even cope with your current bills, debt is something that shouldn’t bother you. If you have funds remaining after all your household expenses are met, however, you should try to pay off your debt.

1. Make a payment plan: A foolproof plan is what you need for getting out of debt on a modest income. Start by writing down the debt amounts you owe to the respective lenders. Now, order your payments by which debt you want to pay off first (may be the one with the highest interest rate, or the one with the lowest amount).

Next, you need to find out how much money you’d be having at your disposal each month to pay off your debt. Bankrate has a nice debt payoff calculator that will help you figure out how much of the total payment will go towards each account’s principle. Even if you have a good amount of cash at your disposal, it’s wise to try to pay off the loan with the highest interest first. When it’s the question of paying off debt, you should give priority to payday loans over student loans, for example.

2. Set up automatic deductions: You may feel the meager amount that remains after all your monthly expenses are met isn’t going to make any difference to your debt burdens, however, every bit helps. If you have automatic deductions setup, you won’t easily skip payments.

If you have a certain portion of money taken out of your account each month, you’ll automatically consider that while preparing your monthly budget and avoid superfluous spending. So, determine how much money you can afford to keep aside for your debt payment and schedule the same to get deducted from your account each month.

Getting out of debt on a modest income can be difficult, but it won’t stop you from becoming debt-free if you follow these guidelines. 5 Tips for Getting out of Debt on a Modest Income- The Art of Better

3. Slash costs: If you’re on a tight budget and don’t have much in the way of available funds to pay off your debts, you have to cut back on costs. Otherwise, it will take you years to pay off your debts.

Evaluate your monthly spending and find out things that aren’t necessary to spend money on. Lowering your expenses will leave more available funds to you to pay off your debt. Consider not dining out, cutting the cable cord in favor of DVDs/Netflix or even utilizing public transportation instead of having car payments.

Every dollar matters. So even if you’re already battling with your finances and think there’s no way to cut down on expenses, gamble on pennies. Sometimes, even small changes make huge differences.

4. Change spending behaviors: This tip might sound like another cost-cutting strategy, but it’s actually quite singular in nature.

If you’re in debt, you may have some debt accounts that are absolutely legitimate – like a mortgage, or student loan. You may also have some bad debts from reckless spending choices in the past. You have to decide to stop unnecessary spending now if you want to become debt free quickly. RELATED: The Simple Way To Tell If Your Shopping Has Become Excessive

5. Seek help: If you don’t know how to break the shackles of debt, it’s better that you hire a specialized debt-free agency or certified financial planner rather than get stuck in decision paralysis. They can help you with affordable advice regarding how to deal with your current financial problems, managing your money, and even developing a debt-free plan. RELATED: Why Everyone Needs A Financial Planner Pt1

If you have multiple debts, you can even consolidate those by getting a consolidation loan at low interest, however, these short-term unsecured loans can be precarious. 

Getting out of debt on a modest income can be difficult, but it won’t stop you from becoming debt-free if you follow these guidelines and stay the course over time.

Andy Masaki circle

Andy Masaki is a blogger at Penny Less Dad and financial writer associated with the Oak View Law Group. He is a debt expert and a member of several online forums where he shares his advice as well as tips to lead a financially independent life. Follow him on 
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