How To Get Out Of Debt When You’re Living Paycheck To Paycheck | Frugality Magazine (2024)

There can be fewer more depressing experiences than finding yourself heavily in debt, but with no idea about how you’re going to pay it off.

After all, when you’re living from paycheck and paycheck, barely making from one month to the next, finding money in order to pay off debt is virtually impossible.

Virtually – but not completely.

At one point – not too many years ago – I found myself in just such a situation. If you’re struggling to become debt free with minimal (or no) disposable income rest assured there is a way out.

Here’s exactly how I managed to get out of debt while living hand-to-mouth…

How To Find Money For Debt Repayment

There’s one irrefutable fact; if you want to get out of debt you’re going to need to find some disposable income to throw at the problem.

No shortcuts or ways around it.

If you are serious about becoming debt free when living paycheck to paycheck then, the single most important factor is finding some way to “create” disposable income each month.

You need a way to generate enough money that you can make a realistic effort at debt repayment.

There are a number of possible options:

Liquidating Assets

If you live in a developed nation then you’re almost guaranteed to have an assortment of belongings.

Perhaps you have the big things like a house and a car. You’re almost certain to have plenty of smaller things – cupboards full of everything from old books to video games to crockery and everything inbetween.

You may have a loft or garage stuffed to bursting point with junk you haven’t touched in years.

The thing is that much of this “junk” has value. All you need to do is to liquidate enough of it to kick-start your debt repayment process.

Now let’s be honest here; while for some people this “downsizing” of belongings can be wonderfully freeing, for others it can represent a scary prospect.

The idea of clearing out clutter and getting rid of belongings you have owned for years fills some people with dread.

If you’re truly serious about becoming debt-free though, this is arguably the quickest and easiest way to kick-start the process. In many cases, thanks to yard sales (car boot sales for my British readers) or by selling items on sites like eBay or Amazon you can rapidly accumulate a nice little lump sum of cash.

Cash that can be applied to your debts.

And for anyone that is intimidated by the idea of selling all their clutter remember that it doesn’t all have to be done at the same time. You can just select one cupboard – or even one box – per week. Just move through the house slowly and methodically figuring out what you’re willing to get rid of to earn back your financial freedom.

Ultra-Frugality

Here in the West we have grown to expect a certain lifestyle. We expect to be able to watch cable TV or buy ourselves a magazine or eat out from time to time. We expect to drive a nice car and to go to the movies sometimes.

Unfortunately all these “lifestyle choices” tend to have two things in common; firstly, they’re “wants” rather than “needs”. Secondly they’re costing you a lot of money each month – money that could be better spent on debt repayments.

A second way, therefore, to find money for repaying debt is to rapidly downsize your lifestyle. Pull out your latest bank statement and study it carefully; go through it like a teacher with a red marker pen looking for unnecessary costs that could be cut. Figure out realistically just how far you’re willing to go and how much money you can save as a result.

The key here is to “go hard”. Trying to eat out a little less each week probably won’t make much of a difference; if you want to make a real impact on your finances then go the whole hog – aim for “ultra-frugality”. If it’s not essential – like your rent or mortgage – then cut it, even for the short term.

Pay Raise at Work

An alternative way to find money for debt repayments is to land a pay raise at work. Depending on your situation this might be simplicity itself or it might be next to impossible. Wither way it hardly hurts to ask your boss what it would take to secure a pay raise. You never know; you might be pleasantly surprised.

Of course, you don’t just* have to land a pay raise with your current employer. An alternative is to look around at other jobs that you could do that pay more. It is often easier to jump ship for a considerable pay raise than it is to land one at your current employer in my experience.

As a side note, if you are fortunate enough to win a pay raise then make sure you carefully stash the money away ready for repaying debts. Too many people allow “lifestyle inflation” to quickly eat up any pay raise they land. Instead discipline yourself and make sure this “extra” money is applied onlyto repaying the debt that you owe.

Second Job

The idea of working even more than you do now might not appeal, but in the case where landing a pay raise is impossible this may still prove to be a good option. Dedicating a few evenings a week – or maybe one day each weekend – to a second job can make a significant impact on your finances.

As well as increasing your take-home pay, a second job also has the benefit of paying you separately. In other words you’ll have two pay packets, making it easier to control and track this “bonus” money in order to make sure that it goes to the right place – namely your creditors.

Side Hustle

The last option for “finding” money for getting out of debt is starting one or more side hustles. A side hustle is some kind of small business that you can run in your spare time. Examples might include writing an ebook, starting a dog walking service or creating a blog.

Conclusion

Whichever option you choose, the key is to appreciate that you aren’t helpless. There are solution for earning more money – and once you’ve got this extra coming in you can really start to pay off your debt – no matter how much you may have struggled with money on the past.

What’s your plan for paying off your debt? Which methods have you tried to make more money in the past? Please leave your thoughts in the comments section below…