According to the US census, the median income for the US in 2014 is $53, 647. Throw in a couple of kids, a mortgage, and some debt and that $53,000 doesn't go very far. It can start to feel like we may never be able to get ahead and reach our financial dreams.
We've been there. We got married right out of college and went into full-time ministry. As you can imagine, we lived the first 7 or 8 years of marriage on a REALLY tight budget. To make matters more stressful, our income was inconsistent. We used debt to keep our heads above water.
We finally had enough and did something about it. We paid off our all debt in a short time period and got serious about our finances. More importantly, we fought back against all those negative thought patterns we told ourselves for years:
"we'll never get ahead"
"we'll never pay all this debt off"
"we'll never give like we want too".
So how do you pay off debt when your budget is already too tight?
1. Get a plan and go at it with all you have.
Make a commitment to pay off your debt fast. The size of your debt will affect the time frame in which you can pay off your debt but make a commitment to pay if off as quick as possible. We paid off $18,000 in 18 months. We made HUGE sacrifices to do that, but we have never regretted it. Go fast.
2. Stop using debt.
Make a commitment to stop using credit to live. Use cash to pay for groceries. Use a debit card instead of credit cards. Paying off debt while continuing to take on more debt is like shoveling snow during a blizzard. You are not making any traction on your goals.
3. Cut out the unessential.
Take a clear inventory of your spending. Are you purchasing a lot things out of habit not need? Are you purchasing only the things you need to survive? This is a tricky thing to do because we can say ALL the food I buy at the grocery store is a need but is it? Did I make a grocery list? Does it fit within my meal plan? How many things do you just unconsciously throw in your cart when you shop? Make a list. Pay attention to what you are buying.
If you really think in terms of WANTS and NEEDS when you shop, you'll be amazed at how little you will spend. Take this new awareness to other areas of your life. Cable, clothing, lawn services, kids activities, vacations, are all things we WANT, not things we need. Your family can do without these things for a short term. They bring HUGE rewards in the end.
4. Work. Work. Work.
Personal Finance is about being excellent stewards of what we make and prayerfully looking to how God would help us increase our income in the future. These two things should be in constant motion for you to see health in your finances.
My kids often joke that my husband and I have 10 jobs. It's not far from the truth. When we took inventory of our life ten years ago, we knew we need to increase our income. We got creative, took on extra work in the evenings and on the weekends, and started a business. Hard work has helped us pay off our debt, reach our goals, and build a future for our family.
Here's the thing: YOU CAN DO IT. You can use your current income as your biggest wealth-building tool. It is possible. Find some cheerleaders in your life who believe in you. Get creative about work and income. Sometimes it takes many streams to make a river. Start and fail. Then, pick yourself and start again. You've got this.
What are your best tips for paying off debt on a low income?