A large percentage of U.S. Americans are struggling to get out of debt. The average adult owes $6,000 to $7,000 just in credit card debt. Adding that debt to regular monthly living expenses, medical expenses, car payments, and other bills, people with lower incomes can find it especially difficult to pay off debts. Here’s some advice on how to get out of debt if you have a low income.

Figure Out How Much Total Debt You Owe

Looking at all your bills can be daunting for someone resolved to getting out of debt. But the first step to paying off all your debts is knowing who and how much you owe. List all your outstanding credit card balances, ongoing monthly expenses (electric, gas, water, cable, phone, insurance, etc.), loan payments, medical bills, and others. Write the payoff dates beside and interest amounts of each loan payment. Calculate the monthly total of all your monthly expenses and debt payments. This will give you a clear view of your finances.

Make a Monthly Budget

Calculate the total of your fixed monthly expenses, like rent, car payments, insurance, and utility bills. Then calculate how much you need for groceries, clothing, gas for your car, household and personal supplies. Add those two totals together and subtract the combined total from your monthly income. The remaining amount is how much money you have for paying off debts. Enter the total amount you can pay each month toward paying off your total debt. Try to increase it when possible and stick to your budget. You may look into using a budgeting app that alerts you when you have reached your restaurant budget for the month, and some banks even have this feature.

Stop Adding New Debts

Generally, when you’re striving to reduce your total debt, you need to avoid taking on additional loans or other expenses that increase the amount of monthly payments. So, you should avoid accepting new credit cards and freeze unnecessary spending while you’re working toward freedom from debt.

Pay Off Debts with the Snowball or Avalanche Method

There are two main methods for paying off debts, and you may use one or the other, or even a combination of each depending on what you owe.

• Snowball Method: Pay off small balances first to free up money each month to pay toward the next larger-sized debts.
• Avalanche Method: Pay the minimum towards small interest items, and extra towards accounts with the highest interest rates. Interest is often an overlooked item that has the potential to increase the amount owed by hundreds of dollars a month.
  The more you use these methods, the more money you will have each month to pay down debt.

Earn Some Extra Money

Today, there is a vast internet economy that offers a wide range of opportunities to earn money online. These include everything from babysitting, pet sitting, food delivery, to ride services, to graphic design work. Pick something you can do to earn some extra cash to help pay down your debt.

Ask About Debt Consolidation

If the accruing interest on your debts keeps building faster than you can pay down the loans, debt consolidation may be your best option. You may want to take out an installment loan to combine some of your debts into just one monthly payment.

Ask for Debt Relief

Debt relief involves asking creditors to help you to manage your debt burden. You will want to call them directly, let them know you are having a hard time making payments, and ask them what options they have for you. Debt relief may come in the form of deferring payments for a period of time, interest rate reductions, changes to repayment terms, or reducing the principal owed. They type of debt relief you can get will vary based on the type of debt owed.

Improve Your Credit Score

It may seem impossible to improve your credit score while you feel overwhelmed by debt. But, having poor credit report makes interest rates higher, which consumes the money you need for paying down your debts. Bad credit also limits your options for refinancing loans to lower interest accounts. So:

• Contact credit bureaus to correct any errors that are worsening your credit rating.
• Pay your bills on time.
• Don’t apply for new credit accounts.
• Reduce your credit card balances to under 30% of your credit limit.

How Long Will It Take for Me to Get Out of Debt?

It is possible to get out of debt with a low income by using the methods discussed above. Yes, it’s going to be challenging, but as soon as you know how much you’ll need to pay each month to make reasonable progress, you have begun to take control of your finances. You’ll become increasingly self-empowered as you see your debts decreasing. And, as you continue paying down your debt total, month by month, you will have the satisfaction of advancing yourself closer to financial freedom.