Perhaps one of the starkest conundrums of life is this: People who can afford to pay the most are often charged the least, while those who can afford the least are routinely burdened with paying more.
Think about it. People who can afford to pay cash aren’t burdened with interest payments. Meanwhile, people who can only afford to buy things on credit are.
This, in part, is what makes getting out of a debt on a fixed income so important. The good news is it can absolutely be done. However, it will take some effort – and yes – a bit of sacrifice. Whether debt has followed you into retirement, you’re on disability or your income never wavers for any other reason, it can be done.
Get a Clear Picture
You have to know exactly what’s right and what needs correcting before you can fix something. Sure, you’ll have a rough idea because you’re paying the bills every month. However, seeing the whole thing down on paper – or in a spreadsheet — gives you the ability to plan your actions more strategically.
Make a list of all of your monthly household expenses for food, utilities, car payments and the like. Keep track of every cent you spend for an entire month to be sure everything is captured. Make a separate list of all of your credit card debt, charge cards, etc. List the balances due, the amount of the minimum monthly payments, the interest rates and the credit limits.
You’ll also need to create a list of all of the cash coming in each month. In some cases, it might just be the one check. Whatever it is, get everything in print so you can look at it.
Reduce Expenses Wherever Possible
It’s time to find a more reasonably priced food retailer if you’re accustomed to shopping at Whole Foods. It’s time to make coffee at home, rather than buying a five-dollar cup every morning. Go to the public library and check out movies for free, rather than paying Netflix, Amazon or AppleTV+.
Walk and/or use the bus rather than Uber, Lyft or a taxi. By the way, taxis can sometimes be cheaper than ridesharing services — look to go old school first if the need is unavoidable. Do you have any auto-renewing subscriptions for things you don’t do anymore? Eliminate those as well.
Simply put, examine every single expense and look for ways to trim the fat.
Create a Spending Plan
Compare your post-reduction expenses to what you were doing before to see how much wriggle room you’ve created. Pairing that data with your income, develop a spending plan in which every penny you have coming in is allotted to a purpose.
Once your adjusted monthly overhead is accounted for, every other cent should go to debt eradication. As many Freedom Debt Relief reviews note, every extra penny you can put toward debt helps — this is true whether you’re tackling it on your own or trying a settlement program.
Pick a Debt Eradication Strategy — And See It Through
One of the most effective debt elimination tactics is the “snowball” method. List your debts in order from the lowest balance to the highest. Make minimum monthly payments on all but the one with the smallest amount owed. Hit it with all of the cash you have left after covering your expenses and the minimum payments on all of your other debts each month.
Continue until it is paid in full and attack the next lowest one in the same fashion — adding that money to what you’re currently paying on the second lowest balance. Work your way through the list, applying all of the accumulated cash to each succeeding obligation as the preceding one is laid to rest.
Finding yourself indebted with a set amount of money coming in each month can be a bit jarring. However, getting out of debt on a fixed income is much easier when you approach it in this fashion. The key is to start as quickly as possible. The earlier your start, the sooner the problem will be in your past.