How to clear your debt even if you have a low income?

Record your finances and pinpoint the debt’s origin

 

Keeping track of where and how you spend your cash can help you effectively handle your budget. The information you receive when you record your finances can also act as a benchmark to be used for future reference. Furthermore, you can  refer to these notes so you can assess your attitude and tendencies towards budgeting.

 

It is of maximum importance to note the debt’s origin to prevent it from recurring in the future. Becoming aware of the reasons why you became indebted and observing necessary adjustments are great measures to avoid being in debt again.

 

Construct a budget plan and stick to it

 

What’s the use of creating a budget plan when you don’t stick to it? If you have a difficult time developing the ideal budget, you may want to try the 50/20/30 budget plan. It was Senator Elizabeth Warren who made it famous.

 

The 50/20/30 budget plan is  a cash allocation guide, in which 50% of your income should cover essential needs such as daily expenses and everyday necessities.

 

20% of your income should be used to meet financial milestones, such as savings, debt repayments, and investments.

 

Finally, 30% of your income should go to your wants, meaning products or services that you don’t necessarily need.

 

If you want to try the 50/20/30 budget plan, spending 30% of your income on going in a fancy vacation or dining out in an expensive restaurant, might seem like a waste of money, but in reality—you’re just sticking to your budget!

 

Some people might not agree about the allocation of cash in this budget plan; if you are one of these people, you are free to tweak the 50/20/30 percentage to suit you better.

 

Moreover, to efficiently track your budget—utilize everything available to you. Use notebooks to note each of your financial transactions and expenses. You can also use software programs or computer spreadsheet like Microsoft Excel to help you visualize your finances.

 

Sell stuff you no longer need

 

Maybe you have some stuff that you no longer need, rather than letting it rot, why not sell it?  Selling preloved items is one way to earn extra money; it also became relatively convenient.

 

You can even sell your preloved items online!

 

Increase your capacity to generate income by doing the following:

 

  • Ask for a salary raise
  • Take paid survey
  • Investing
  • Create a blog and monetize it
  • Babysit
  • Tutor
  • Getting a side job

 

Author: Donna Woods

  • 6+ years of experience in financial analysis
  • 5+ years of experience as a writer, published author, editor, and screenwriter