Depending on the amount of debt you have and your other obligations, having a small income can cause some financial strain. If your goal is to pay off your debt, but you do not know where to start, there are a few options you can pursue in order to make paying off debt a little more possible. Regardless of your course of action, you have to remember to stay patient and have the discipline to stick to your plan. If you deviate, even slightly, or lose hope, you will fail at paying off your debt.
*You Must Have A Strict Budget:
Because you are working with a small income, you have to have a very strict budget. This means that you need to get rid of all of the extraneous expenses that are doing nothing but taking money out of your pocket. Everything that is not an absolute necessity must be avoided or canceled. For example, cable television, cell phone plans, home telephone plans, and other non-essentials need to be extremely reduced or eliminated.
By doing this, you will be able to free up some income to use towards paying off your debt. However, it is vitally important that you cut out all of the fat in your budget. As stated above, you need to cut out all non-essential bills. This point cannot be emphasized enough.
*Pay Off Your Highest Interest Debt First:
The best way to tackle your debt is to tackle it in pieces and not as a whole. This means you should focus on paying off one debt at a time. By doing this, you will pay off your debt sooner and for less money. However, you should not arbitrarily pick a debt. You should always pay off the highest interest rate debt first.
By paying off the highest interest rate debt first, you are saving yourself the most money. The highest interest rate debt will accumulate more interest than will your other debts. As such, if you do not pay it off first, it will end up costing you the most money.
This does not mean that you should avoid paying your other debts. Put simply, you should allocate the largest piece of your debt repayment fund to the highest interest rate debt and allocate the rest evenly among the other debts.
*Stick With Your Plan:
As stated above, repaying debt takes time. As such, if you get discouraged or deviate from your plan, you will not accomplish your goal. Therefore, stay the course and take comfort in the fact that if you stick with the plan, you will be debt free.
Remember, you must have a strict budget that eliminates all non-essential bills. Always pay off your highest interest rate debt first. Finally, make sure you stick with the plan if you want to become debt free.