How To Pay Off Debt Quickly Even on a Low Income

Are you overwhelmed by your credit balance and wondering how to move forward? Financial independence might seem like a faraway dream if you’re deep in debt.

After I graduated college, I had a student loan to pay, and my income was too small to cover it. I was barely surviving at that point. 

I almost gave up, but I couldn’t because financial independence was a lifelong dream of mine. 

If you’re in the same situation and can’t see any possible way to cover your debts and stay afloat, all while investing in your future, this article is for you. 

I’ll share the strategies I used to pay off debt quickly, hoping they work for you, too. Whether you have small or big debts, you can get rid of them quickly by following these steps.

How Do I Start Paying Off Debt?

It’s possible to pay off debt quickly, even if money is tight. 

It all boils down to tracking your expenses and channeling every extra dollar toward your loans rather than spending on things you don’t need.

If you’ve been wallowing in debt and looking for a way out, here’s the best way to get started:

Calculate Your Total Debt 

The first step to better financial health is knowing what you owe, down to the last cent. 

Adding up your debts may be discouraging, especially if you owe too much money and have little income to finance them.

However, knowing exactly how much you owe gives you a goal to work towards. Imagine celebrating debt-free after working hard to pay off your debt, only for another one to resurface.

Calculating your total debt is the first step in the 1,000-mile journey to financial freedom.

Start by listing all your debts, including credit cards, student loans, mortgages, and the money you owe friends and family. 

It doesn’t matter whether you plan to repay them now, later, or in bits. Don’t think of a strategy now. Simply list your debts.

After exhausting your list, determine interest rates, penalties, and minimum monthly repayment requirements. 

From there, add up the minimum monthly requirements for all your debts to determine how much you need to repay per month. 

Cut Back on Unnecessary Spending 

This step is one of the most important if you want to pay off your debt quickly. You may think you don’t have enough to cover your debts, but a closer look at your expenditures might prove this wrong.

When I say cut back your expenses, I don’t mean stripping your shopping list to the bare minimum or settling for cheap products. 

On the contrary, shifting to cheap products or neglecting your necessities may adversely impact your health. 

Here’s how to cut back without compromising your comfort:

• Track your expenses: Start by tracking your expenses using an expense-tracking app or Excel sheet. You can get free apps on the Google Play Store or the App Store. You can also get free expense-tracking sheets online or make your own. 
• Distinguish your needs from wants: This is one of the steps I found difficult in my quest to become debt-free. Separate necessities like food, shelter, and clothing from wants like eating out, daily coffee, or subscriptions you don’t need. 
• Cut back on your expenses: After creating separate lists for needs and wants, determine how much you can save after cutting back on your wants and impulse purchases. 

Once you have a clear picture of your monthly expenditure, allocating extra income to debt repayment is easy. 

Create a Budget and Stick To It

Just like you need a map to navigate unfamiliar places, a budget guides you in allocating your money. 

However, in my case, creating a budget has never been a problem. The challenge is sticking to it. 

You can make the best budget in the world, but it’ll be useless if you can’t be disciplined enough to follow it. 

Also, a budget helps ensure you don’t use all your income to pay for debts, leaving little or no money for day-to-day expenses. 

Don’t look at your budget as something that restricts your spending. On the contrary, a budget helps you prioritize the most essential items and gives you control over your income. 

Consider using a budgeting app. You can also customize a budgeting template to your needs using Excel or Google Sheets. 

These budgeting tips will help you create a budget that works and avoid common mistakes many people make.

How To Pay Off Debt Quickly 

People believe the answer to a debt problem is having a high income. However, with the right strategies, you can pay off debt quickly, even with a low income. 

Being financially disciplined plays a huge role in managing your debts. This way, you can easily allocate money towards your loans rather than waste it on unnecessary purchases. 

If you have a large debt stagnating your finances, buckle up because these strategies are the surest ways to pay off debt quickly.

1. Debt Avalanche Method 

The debt avalanche method is my favorite method for debt repayment because I prefer conquering the biggest hurdles before the smaller ones. 

This strategy involves prioritizing the largest debts over the small ones. Consider interest rates, as some loans have higher rates than others. 

If you have two loans to pay off and one has twice the interest rate of the other, consider starting with that loan. Once you climb that hill, move on to the debt with the second-highest interest rate.

The debt avalanche method is a solid strategy for debt repayment and also helps you save money on interest payments in the long run. 

However, this method might be overwhelming because it may take a long time to finalize a single debt. 

If you choose to go down this path, keep a list of your financial goals to help you remain motivated and disciplined. 

2. Debt Snowball Method 

Do you prefer starting with smaller tasks on your to-do list and gaining momentum to handle larger tasks as you cross the smaller ones off your list?

If so, the debt snowball method might be the right approach for you. It’s the opposite of the avalanche method in that the debt snowball method involves paying off the smallest debt first. 

Write down a list of your debts together with their interest rates. Pay off the smallest loan and move on to the second smallest once the latter’s balance is zero.

Once you handle the second smallest debt, move up to the third smallest, and so forth until you settle all your debts entirely. 

The most significant advantage of the debt snowball method is that it gives you quick wins, which can help motivate you on your journey to a debt-free life. 

The snowball strategy is worth considering if you struggle with motivation or are trying debt repayment strategies for the first time. 

However, choosing the debt snowball method might be more costly in the long run since the loans with the highest interest rates keep growing as you focus on the smaller debts. 

3. Consolidate Your Loans 

Another helpful strategy for paying off debt quickly, even with a low income, is consolidating your debts. 

This refers to combining all your debts into one, which usually has favorable terms, such as a lower interest rate. 

Here are the best ways to consolidate a loan:

Take out a debt consolidation loan

You can consolidate your loans by taking out a larger loan to repay multiple smaller ones. 

Taking out another loan may sound odd, mainly because you’re trying to eliminate your debt. However, hear me out. 

By taking out a larger loan and using it to repay multiple smaller ones, you have only one loan to manage monthly, which is easier than juggling multiple debts. 

This also reduces your interest rates, enabling you to channel more money toward debt repayment.

A significant disadvantage of this loan is that you may only qualify for one or more favorable terms with a good credit score. 

Balance Transfer Credit Card

Another way to consolidate your loans is through a balance transfer card. 

This strategy transfers balances from multiple credit cards into one with a 0% or lower introductory interest rate.

The introductory period can range between 6 and 21 months, during which you can pay off the amount without accruing interest. 

However, once the introductory period ends, a balance transfer credit card may accrue more interest than individual debts. 

Another disadvantage is that you may need a good credit score to qualify for a balance transfer credit card.  

Talk to a Credit Counselor 

Do you feel like you’ve hit a dead end because you can’t find a successful debt repayment strategy that suits your needs? Credit counseling is an excellent way forward. 

A credit counselor reviews your debts and financial goals and helps you determine the best debt management plan. 

They can also negotiate with creditors to reduce the interest rates on your loans significantly. 

They can also negotiate better terms to reduce your monthly minimum repayment requirements. While this may prolong your loan repayment period, it makes your debts more manageable. 

Another advantage of credit counseling is that you make one monthly payment to your counseling agency, which then distributes the amount among your lenders.

This plan makes debt repayment less overwhelming, especially when juggling multiple debts. If you work with and follow your counselor’s advice, you’ll likely be debt-free in 3-5 years. 

You can’t take a new loan or use credit cards while on a debt management plan with a credit counselor. 

Overall, if you prefer working with a professional, are struggling with financial discipline, or want to avoid bankruptcy, working with a credit counselor is the best way to pay off debts quickly.

Other Ways to Pay Off Debt Fast 

Picking a debt repayment strategy like the avalanche or the debt snowball method is an excellent way to pay off debt quickly, even on a low income. 

However, they aren’t the only strategies for becoming debt-free. Here are other methods I tried in my debt repayment journey.

4. Consider a Part-Time Job 

A part-time job could increase your income by over 50%, providing more money for debt repayment. This way, you can repay your loans faster. 

The problem is not all 9-5 jobs guarantee more income if you work extra hours. Luckily, the gig economy has plenty of opportunities you can take advantage of. 

Here are some options:

• Freelancing: From graphic design to web development and proofreading, freelancing is an excellent way to sell your skills. The best part is you can create your schedule and rate card depending on your expertise. If you have a skill you can monetize, consider signing up on platforms like Upwork, Fiverr, and Guru. 
• Food delivery: Do you have a car or motorbike and plenty of extra time? If so, consider working as a food delivery driver on DoorDash, Instacart, or Uber Eats. 
• Ride-share driving: Many people avoid driving their vehicles because of the surge in gas prices. Therefore, if you have a car and enjoy driving, you can make over $30 hourly as a rideshare driver. Consider signing up on platforms like Uber and Lyft. 
• Petsitting: Do you like to be around furry friends? If so, petsitting is an excellent way to make extra income towards debt repayment.As a petsitter on Rover, you can earn between $18 and $30 hourly. 

5. Ask for a Raise 

Are you constantly working and have little or no extra time to dedicate to a side hustle? 

You can increase your income and free up more cash toward repaying your debts by asking your employer for a raise.

Asking for a raise might be intimidating, but you deserve it if you’re working longer hours, bringing in more clients, or handling a larger workload. 

Picking the best time and way to present this suggestion to your boss can be a deal-maker or breaker. You also need tangible reasons to back your request for a raise. 

Start by benchmarking your salary to determine if it’s at par with the going rates for your state. From there, quantify your achievements and highlight your benefits to the organization. 

Having additional education or technical skills is an added advantage. Even having worked the same job for several years says a lot about your expertise. 

With your skills, expertise, and past achievements as armor, find the opportunity to head to your boss’s office and plead your case. 

6. Sell Stuff You Don’t Need 

Another way to make extra cash and pay off debt quickly is by selling stuff you don’t need. The best part is that someone will pay a significant sum for something you’re not using. 

Therefore, don’t dismiss any item because you think it’s too last season for some to buy. As long as it’s in good condition, you can find a new owner. 

Thanks to technology, you can sell your items online without meeting up with the buyer. However, shipping and delivery costs may apply in this case. 

Before we discuss selling options, here are some items you can sell:

• Furniture 
• Clothes 
• Shoes 
• Accessories 
• Video game consoles 
• Artwork 
• Collectibles like Pokemon cards 
• Handmade crafts 
• Electronics 
• Books 

Some selling platforms do well for specific items. For instance, if you’re selling used clothes, platforms like Poshmark and Depop are excellent options. Gizmogo is fantastic for video games. 

Other platforms, such as eBay, Mercari, and Facebook Marketplace, allow you to sell virtually anything. Simply take a clear picture and list your items on the platforms. 

If you want to sell your items locally to avoid shipping fees, consider hosting a garage sale or finding local buyers on Craigslist or Facebook Marketplace. 

7. Renegotiate Your Bills 

If you’re a long-term customer, many service providers will be willing to reduce your bills even if by a small amount. You only need to ask.

Start by looking at your bills and comparing your service provider’s prices to their competitors. 

From there, contact their customer service and renegotiate your bills. You can also ask them if they have discounts you can take advantage of. 

This strategy may not always work, but if it does, it can be an excellent way to free up more money for your debts and clear them quickly. 

Frequently Asked Questions 

What Is the Fastest Debt Pay-Off Method?

The debt avalanche method is one of the fastest ways to pay off debt. It primarily focuses on tackling high-interest debts fast, therefore preventing interest from accruing significantly. 

With the debt avalanche method, you can save on interest rates over time and invest it in smaller debts. 

How Do I Pay Off Debt ASAP?

There are many approaches to paying off debt quickly. Depending on your financial situation, goals, and debts, you can focus on one or stack several strategies. 

Start by calculating your total debt, readjusting your expenditures, and creating a budget. Then, choose a debt repayment strategy, such as the avalanche or snowball method, and stick to it.

You can also consolidate your loans to make them more manageable or speak to a credit counselor for a more professional approach.

How Do I Pay Off Debt If I Live Paycheck To Paycheck?

Paying off debt is possible even if you’re living paycheck to paycheck. It all depends on how effectively you manage your income, however small. 

Consider adding up all your debt and readjusting your budget to free up more cash towards it. If you have multiple debts with varying interest rates, consider consolidating them to make them more manageable and reduce interest over time. 

The debt snowball method may also be an excellent way to handle debt if you’re living paycheck to paycheck. It involves focusing on smaller debts as you work your way up to the bigger ones. 

What Do I Do If I’m in Debt and Have No Money?

Being in debt with no money is difficult, but getting out of it is not impossible. Start by looking for a job or a source of income. 

You can leverage your skills on freelancing platforms like Upwork, Fiver, PeoplePerHour, and Guru. You can also sell stuff you don’t need, like clothes, extra space, or electronics. 

Another alternative is renegotiating terms with your creditors to prevent interest from accruing too high as you look for a way to pay off the debts.

Finally, consider debt relief programs.

Final Thoughts 

Paying off debts quickly is possible even if you have a low income. Track your spending and determine how you use your money to find ways to free up cash for debt repayment.

It may seem like an uphill task, especially if you’re living paycheck to paycheck, but with patience and the right strategies, you can become debt-free in a few years.