According to Bankrate, American families owe more than $5,000 in debt on average. This includes unpaid bills, credit card payments, mortgage payments, car payments, and the like. While figuring out how to get out of debt may seem like a far-fetched goal for people with a low-income, there are things you can do to pull yourself out of debt.

With that in mind, here’s how to get out of debt on a low income.

1. Draft a Spending Plan

The most important thing you can do to avoid going deeper into debt is to stop creating more debt! Craft a spending plan and stick to it. Write down what your mandatory expenses are and eliminate unnecessary or frivolous spending.


After you’ve learned how to stop incurring additional debt, the real work of figuring out exactly how much you owe can begin. Make a note of every open account, outstanding balance, and even closed accounts that still have a balance.

When you total the amount of all of your accounts (including closed and collections accounts.) You’ll have a better estimate of how much you owe and how to get out of debt. Be sure to include interest rates, balloon payment amounts, late fees, taxes, and penalties in your total. Understanding how much debt you have to tackle is an important part of how to get out of debt with a low income.

Once you’ve totaled up the amount of your debt, the next step is to follow a step-by-step plan to reduce your debt.

2. Pay Off Smaller Account Balances First

While you may be tempted to pay off larger debts by making bigger payments, debt repayment experts recommend paying off smaller balances first. This frees up more income to pay off larger debts when you pay smaller account balances in full. Feed minimum payments to all but the account with the lowest balance. Put as much money as possible toward that one each month, until it’s paid in full. Proceed by shifting that strategy to the next largest one until they’re all paid off.

3. Increase Your Income

Increase your income by taking on a part-time gig or job. Dedicate a percentage of these additional earnings to your debt repayment efforts. Using automated banking features that transfer designated amounts from your checking account to your savings account is a great way to save money for paying off debts. Over time, you may be surprised at how much debt you’re able to pay off by using the automatic savings method.

4. Beware of Debt Scams

There exists a subculture of people whose chief aim in life is to get as much as possible while expending the least amount of energy. And, while working efficiently is certainly something to be admired when that translates into preying upon the misfortunes of others— well, that’s something else entirely. The FTC has more information on this subject than could ever be packed into an article such as this. Do yourself a favor and go check it out.

Employing the steps in this guide to learning how to get out of debt on a low income can help rebuild your finances and gradually get you out of debt — even with a low income. Once they’re paid off, you can then set to building up your cash reserves so you can avoid going into debt again in the future. This is the smartest way to begin to live a debt-free life.

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