Five Tips For Getting Out Of Debt On A Limited Budget

Budget-Debt-Stephanie Bates-Chispa MagazineA Considerable Problem
The Independent reports that the global debt has hit an all-time high. Now, although it’s reported that the vast majority of that debt is actually a good one—the kind of debt used to acquire wealth in the future—it’s still a household burden that requires a lot of effort.

So let’s structure these five tips on the assumption that you make $20k/year. That’s about $1,667 a month. How can you get anywhere on such a budget?

One: Live Beneath Your Means
Today’s It’s important to strategize even purchases which seem minor, like the groceries. These things are discretionary—but not if you’re on a budget. You can live on $100 a month if you’re at $1,667/year. How? Rice. Discount meat. Food banks. EBT, if you qualify. Food drives, potlucks, community events—be creative.

Have you ever heard of Big Lots? You can get some good food very cheaply there. Prepare your own meals. $100 a month is $3.22 a day. If you by frozen vegetables and meat, then prepare it with rice and drink filtered water, you can stay pretty healthy at this rate.

You can get a bag of frozen chicken breast meat for $10, rice for a month for $3, and spend $30 on frozen veggies as well as $10 on seasoning. You’re at $53, and you can make that last two weeks if you’re disciplined. Do that and you can spend around $1,200 a year on food. That’s living beneath your means.

Two: Cut Out Any Excess
How much is that coffee from Starbucks every morning including the tip? $3? $5? If you’re spending $3 a day, that’s $90 to $93 a month, or $1,095.75 a year. How about fast food, do you ever eat out? A “fancy” meal is $50 to $100. Fast food is around $5 per meal.

If you average them together in a week, $70 isn’t untoward. That’s one $50 fancy meal, two $10 fast food stops—and $3,640 a year. Cut out the coffee and the eating out for a year, you’ve saved $4,735.75. In short: if you don’t need it to survive, don’t buy it.

Three: Supplement Your Income
What’s your rent? $700 a month? How much do you pay for gas; $240 a month? That’s $940, leaving you $727 for food, emergencies, debt repayment, etc. If $100 of that is food and $200 is discretionary unexpected expenses, you can pay $427 a month back on your debt monthly based on a $1,667/month salary, for $5,124 back on your debt a year.

Now that’s pretty good, but it’s still not quite enough, is it? Find means of supplementation. Now you’re itemizing your time. Are you artistic? Sell some paintings, carved figurines, scarves, or knit mittens. Do you write? Sell some articles. Do you have three spare hours a day? Take surveys for $8 an hour and make an extra $7,512 a year, minus Sundays.

A more advanced option would be to actually start thinking about making investments. In Australia, purchasing a property to then rent out is a popular form of long-term investing. With research or help of a professional, you, too, can take this path.

Four: Consolidate Multiple Debts
It’s also important to be very careful, and understand all the ins and outs when it comes to home loans. Sometimes you can get out of the bank repossessing your house, even though you may still owe for a loan you took out to form another group to pay the mortgage.

A home loan is likely going to be a primary debt; but one way out of it, if you can get approved, would be to consolidate that loan with other debts through a third party. They pay off what you owe, and now you owe this debt consolidation agency. But when you consolidate, it cuts down your losses from interest, meaning you end up saving over time.

Five: Prioritize Debt Repayment
Pay back the hard loans first. If you can’t, consolidate and pay that sum off as quickly as you can. It’s like eating your veggies before dessert, or working out before you’re physically fit.

Financial Independence
If you’ve got $20k in loans and interest high enough to add $10k to that figure in a year’s time, you can get it paid off within five years using just the strategies in this writing at $1,667/month as your primary salary. It won’t be easy, but if you’re diligent, you can be financially free. You may also find other ways of making money that even reward you better over time.

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Stephanie Bates

Stephanie Bates

Stephanie Bates is the founder of Military Travel Mama; she is the wife of a military professional and mother to two children. Follow her blog for more about military life, military discounts, family trips, healthy eating, and parenthood.
Stephanie Bates

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Stephanie Bates

Stephanie Bates is the founder of Military Travel Mama; she is the wife of a military professional and mother to two children. Follow her blog for more about military life, military discounts, family trips, healthy eating, and parenthood.