How to Pay off Debt Fast on a Low Income: 6 Ways to Kill Debt for Good

It’s not always easy to know how to pay off debt fast on a low income. At the beginning of my pay off debt journey, I was working a minimum wage job, and the $50,000+ number felt so staggering. I had no idea how to pay off debt quickly on a low income and felt like giving up before I even started.

Thankfully I didn’t give in to that feeling. Just over five years later I was debt free and on my way to pursuing financial freedom. If you’re looking for the how to get out of debt with a low income, this article will give you the tools you the necessary to kill debt for good.

How to Pay off Debt Fast on a Low Income

Paying off debt quickly is not easy, especially if you’re trying to stop living paycheck to paycheck. However, it is possible. The internet is full of successful debt payoff stories, and the commonality they share is that everyone in debt worked their tails off to get rid of it.

If you’re looking for ways to get out of debt on a low income, the key is to get real with yourself. You need to assess your situation honestly and have a reality check on the seriousness of the debt.

No, this is not easy, but it is vital to wiping the slate clean and creating an attack plan to kick your debt to the curb.

Here are a few of the key things to do when trying to figure out how to pay off debt fast on a low income:

• Have a reality check with your debt –determine exactly how much debt you have
• Decide which sacrifices you’re willing to make to kill the debt
• Start tracking every cent you spend
• Save AND make more money
• Have a visual or written goal
• Most importantly, extend yourself some grace

That last bullet is important because you will make mistakes. That’s okay. You’re human, and we all make mistakes. Paying off debt is difficult, but it’s that much more so if you don’t give yourself some leeway.

Determining how to pay off debt fast on a small income is half the battle, extending yourself grace is the other half that helps you become successful.

1. Maximize Your Payments

I always used to think that making the minimum payment on my credit cards was a good thing. It’s not, for one simple reason. When you make the minimum payment, very little goes towards the debt balance with most of it going towards the interest.

Paying more than the minimum is where you really gain momentum.

This is where saving and making extra money is key as it gives you more money to throw at the debt. If you want to know how to pay off credit card debt fast on low income, a critical piece is to lower your interest rate.

Lowering your interest rate means less money goes towards the interest and more goes towards the actual debt. When you combine that with saving and making more money, you can really start killing your debt.

If you are paying 15-20 percent on your credit cards, Fiona by Even Financial can help you lower those rates by half or more. Even reducing your rate by a few points can do wonders to help you pay off debt quicker.

Fiona lets you compare up to 17 lenders to find the best personal loan for your needs. It takes less than two minute to fill out the application.

Once you complete the application the platform provides the lenders that best fit your needs.

If you have student loans, you can do the same thing with Credible. The lender offers rates as low as 1.86 percent APR*, with auto pay, and is a great way to consolidate or refinance loan payments and pay them off quicker. (*See Terms)

Check your rate at Credible to see how much you can save.

If you want to learn more about Credible, read our review to see how you can use them to refinance student loans.

2. Bring in Extra Money

Cutting only takes you so far. If you truly want to know how to become debt free on a low income the power is in making extra money.

Cutting is great, but it has limited reach. You can optimize what you’re doing by making extra money. There are countless ways to make extra money, the easiest being right where you work – such as:

• Ask for a raise
• Work overtime

Take the bump in your pay and throw it at your debt. If those aren’t an option, there are still other options to make extra income. Here are some ways that require little skill:

• Drive for DoorDash. Similar to driving for Lyft but you deliver meals, and work on your own schedule. Earnings are paid weekly and vary based on tips and expenses.
• Be a personal grocery shopper with Instacart Shopper. You can shop for groceries and deliver them to people while earning up to $20 per hour.

Driver apps like DoorDash are an excellent option if you need to earn extra cash but need flexibility. Read our guide on the top jobs like DoorDash to work for if you need cash.

Don’t want to add an extra job? You can make money in your downtime by taking surveys. They won’t add a lot, but every little bit helps when trying to pay off debt quickly on a low income. Some of our favorite survey sites are:

• Survey Junkie – They deposit your payments straight into your PayPal account and are one of the top rated survey sites.
• Pinecone Research – They pay $3 per survey and you can take payment through virtual Mastercards,  Amazon Gift Cards, or other rewards options listed. If you’ve joined Pinecone in the last 30 days, your first redemption must be by bank transfer to verify your rewards account.
• Opinion Outpost – One of the top survey sites in the industry and they have $10,000 quarterly drawings.

These are just a few of the ways to make extra money to pay off debt. Here are 25 other ways to make extra money that you can use to pay off debt fast.

3. Start a Minimum Needs Budget

The first step in paying off debt on low income is often to create a minimum needs budget. If you have no experience living on a budget, read our great guide on how to make a budget.

A minimum needs budget works just as it sounds. You determine the minimum you need for day-to-day living, or what you absolutely need to survive. Look first at your large expenses, which are:

• Food
• Housing
• Transportation

Look for opportunities to save money. Maybe that means getting a roommate. It can also mean selling your car and getting a cheaper one or taking Lyft or Uber if it’s cheaper. It may also mean cutting down on food costs if you like to eat out.

The purpose of this is to free up money to throw at your debt. Next, you want to look at things you don’t need. Those are often a variety of things from needless subscriptions to cable TV.

You can spend time trying to cut or negotiate those bills, or you can use Trim. Trim is a free to use app that negotiates bills to lower rates and cancels old subscriptions allowing you to bank the savings.

Rocket Money is a suitable alternative that also monitors for electrical outages and requests refunds.

Again, the purpose of this is to free up money to throw at your debt.

The simplest way to set up your minimum needs budget is to track your spending. You want to keep track of every cent you spend to learn where your money goes each month.

We recommend Tiller if you’re looking for a way to track your spending. Tiller lets you view all your financial transactions in one location, through automation.

The Tiller platform is a Google Sheets based service that automatically pulls all your banking and other financial transactions that helps you categorize your spending and find opportunities to save.

Tiller is free to use for the first month, then $7 per month thereafter.

4. Give Yourself Freedom

I owe this trick to the credit counselor who helped me start my journey in paying off debt. Their suggestion was to set aside a certain amount of money each month to do with as you please.

Yes, it may sound contradictory to a minimum needs budget. It’s not. Paying off debt fast on a low income is a challenge. You make that challenge much more difficult when you have no outlet to do something you enjoy.

For me, I held back $10 per month in the beginning. That allowed me to go see a movie every month, which helped stave off debt fatigue and kept me going more times than I remember.

Determine the amount you want to hold back, start small, and freely use it on what you want.

5. Pay Yourself First

Paying yourself first sounds difficult, but it’s simple when done the right way. Paying yourself first means that you take a certain amount out of each paycheck, before you pay anyone, and put it in savings.

This helps you build savings so when you run into an emergency you have cash to rely on instead of using a credit card, which only keeps you in debt longer.

*Related: Need to rebuild your credit? Check out our guide on where to apply for a credit builder loan to see if they’re a viable choice.*

Many online savings accounts let you automate this savings and have no minimum balance requirement. It doesn’t matter if you start by saving $5 per month in the beginning.

The point is to start so you can grow your savings and not continue the cycle of debt.

Chime is an excellent option that rounds up each purchase you make to the nearest dollar. They place that amount in a savings account so you can grow your savings.

Read our review of Chime here to learn more about the financial app.

6. Identify Your Triggers

Triggers are huge when paying off debt. Heck, triggers are huge even if you’re not in debt. Triggers are what get you to spend money.

My trigger was boredom. It still is to a certain extent today. I’d get bored and go to the mall and spend money I did not have. That just continued my cycle. The key to my success was identifying that trigger and knowing how to counteract it.

This requires getting to know yourself and how to avoid problematic situations. You can even get an accountability partner to help you avoid those triggers.

Bottom Line

Trying to pay off debt fast on a low income seems impossible. It feels like you will never have success. It feels like it will last forever.

Those are all lies. It is possible to pay off debt fast, but it does take a lot of work. The key is to take one day at a time. Some days will be tough, but those are balanced out by good days when you have the right mindset.

Set goals for yourself along the way and follow these steps; you’ll be amazed at how soon you’ll enjoy the taste of debt freedom.

What are some other ways to get out of debt quickly on a low income? If you’ve paid off a large amount of debt, how long did it take you to kill it? What are some things you wouldn’t sacrifice to pay off debt?

*Earning more on certain types of orders (ex. alcohol): Earn more per order as compared to restaurant orders. Actual earnings may differ and depend on factors like number of deliveries you accept and complete, time of day, location, and any costs. Hourly pay is calculated using average Dasher payouts while on a delivery (from the time you accept an order until the time you drop it off) over a 90 day period and includes compensation from tips, peak pay, and other incentives.

*Get paid instantly (DasherDirect): Subject to approval

*Cash out daily (Fast Pay): Fees apply

*Start Dashing today: Subject to background check and availability

*Dash anytime: Subject to availability