How to Get Out of Debt on a Low Income: A Step-by-Step Plan to Take Back Control

Getting out of debt can feel overwhelming. And if you’re on a low income, it can seem almost impossible. When every dollar is already spoken for—rent, bills, groceries—how do you find extra money to tackle debt?

But here’s the truth: You can get out of debt, even on a small income. It won’t be easy, but it is doable. It’s about making small, consistent changes and building better habits that will get you to a place of financial freedom.

This guide will show you exactly how to start, where to find extra money, and how to keep going when it feels tough. You’ve got this. Let’s break down each step, so you can build a plan that works for your life.


A split image with a flustered person looking at bills on one side and a happy person using tools to budget on the other side.

1. Know Where You Stand: Calculate Your Total Debt

The first step is to face the numbers. This part is hard, but it’s necessary. Gather all your debt information and write it down. List every loan, every credit card, and every unpaid bill.

What to Include:

  • Credit Card Balances: Write down the total amount and interest rate for each.
  • Student Loans: List them separately by lender and interest rate.
  • Car Loans or Medical Bills: Include any other personal loans you have.

Create a Simple Debt Spreadsheet:

  1. Write down each debt.
  2. Include the interest rate and minimum monthly payment.
  3. Add up the total amount you owe.

Seeing the total number might feel scary. But knowing where you stand gives you a starting point. From here, you can build a clear plan.


2. Build a Bare-Bones Budget: Find Your “Debt-Crushing” Money

A bare-bones budget means cutting back to the essentials. It’s a temporary budget focused on paying for needs and using every extra dollar to attack your debt. Even if you can only find $10 or $20 in your budget, every little bit helps.

How to Create a Bare-Bones Budget:

  • List Your Essentials: Rent, utilities, groceries, and transportation.
  • Cut the Extras: No subscriptions, eating out, or impulse buys for now.
  • Set a Small Fun Budget: It’s okay to set aside $10 for a small treat. This helps avoid burnout.

Take any money left over and put it directly toward your smallest debt or the one with the highest interest.

👉 Need a free budgeting tool? Learn how to create a budget with Excel.


3. Use the Snowball or Avalanche Method: Choose Your Strategy

There are two main strategies for paying off debt: the Debt Snowball and the Debt Avalanche. Choose the one that motivates you the most.

Debt Snowball:

  • Focus on your smallest debt first, regardless of the interest rate.
  • Pay as much as you can on this debt while making minimum payments on the others.
  • Once it’s paid off, move to the next smallest debt.

Debt Avalanche:

  • Focus on the debt with the highest interest rate first.
  • This will save you the most money in the long run.

Both methods work. The snowball builds momentum fast, while the avalanche saves you more on interest. Pick the one that keeps you motivated.

👉 Learn more about the Debt Snowball with this guide.


4. Start a Side Hustle: Earn More to Pay Off Faster

If your budget is tight and there’s no room for extra payments, consider starting a side hustle. Even just an extra $100 a month can make a huge difference when you’re on a low income.

Easy Side Hustle Ideas:

  • Freelancing: Offer your skills on Upwork or Fiverr.
  • Pet Sitting or Dog Walking: Sign up on Rover.
  • Food Delivery: Try DoorDash or Uber Eats on weekends.

The key is to pick something flexible that you can do around your current job. Put every extra dollar directly toward your debt.

👉 Want more ideas? Check out our guide on creative side hustles.


5. Sell What You Don’t Need: Turn Clutter into Cash

Look around your home. Is there anything you can sell? It could be old electronics, clothes, or unused furniture. Selling stuff you don’t need can bring in quick cash that you can put directly toward your debt.

Where to Sell:

  • Facebook Marketplace: Great for local sales.
  • eBay: Ideal for electronics and collectibles.
  • Poshmark: Sell clothes, shoes, and accessories.

Even a few hundred dollars can help you pay off a small debt and build momentum.


6. Use “Found Money” to Boost Payments

Any unexpected money should go straight to your debt. This could be a tax refund, a bonus, or even cash gifts. Don’t use it for a splurge—use it to get one step closer to financial freedom.

Ideas for Found Money:

  • Birthday or Holiday Gifts: Consider using a portion to pay off a debt.
  • Tax Refund: Even $500 can make a big dent.
  • Rebates or Cash-Back Rewards: Direct small wins like these to your debt.

Every dollar counts. Use these windfalls to supercharge your progress.


7. Celebrate Small Wins to Stay Motivated

Paying off debt, especially on a low income, can feel like a long road. That’s why it’s important to celebrate every win. Did you pay off a credit card? Did you stick to your budget for a month? Celebrate it!

Ways to Celebrate:

  • Share your success with a supportive friend.
  • Treat yourself to a small, budget-friendly reward.
  • Keep a visual tracker (like a thermometer chart) and color in your progress.

Every small victory brings you closer to your goal. Recognize it, celebrate it, and keep going.


8. Stay Focused on Your “Why”

When it gets hard—and it will—remember why you’re doing this. Maybe it’s for your family. Maybe it’s to finally feel free. Or maybe it’s to stop the constant stress that debt brings.

Write down your “why” and keep it somewhere you’ll see it often. Staying connected to your purpose will keep you pushing through the tough days.


Final Thoughts: You Can Do This—One Small Step at a Time

Getting out of debt on a low income is hard, but it’s not impossible. Start with small changes, stay consistent, and celebrate each step forward. Remember, you’re not just paying off debt—you’re building a better future for yourself. A future where you’re not weighed down by bills or fear.

You can do this. One dollar at a time, one debt at a time, you’ll break free. And every step forward is proof of your strength and determination.

You’ve got this. Start today, and watch how even the smallest steps add up to a big victory.

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