8 Ways to Pay Off Debt Fast with Low income

As per statistics provided by Debt.Org, a whopping 87% of families in the United States are in debt. The United States is the number 1 country in the world debt circle, sharing 31% of global debt (source: visual capitalist website). And no, we are not happy with being number 1 here. 

Here, we need to understand that debt itself is not the problem. It is how we approach debt payment that impacts our financial health, and overall peace of mind. 


The truth is, no one likes to be in debt, or pay mortgage bills for the rest of their lives. Whatever your beliefs about money, I have not come across a single individual who does not want, or strive, to be debt-free. 

Now, with all things finance, debt too needs clear planning and goal setting. Without planning, you will not be able to set a goal. Without a goal, you will lose track, and consistency. That is the most important factor for achieving success in anything you do, including payment of a debt. 

I have compiled a list of 8 foolproof ways to help you clear off debt even if your income is limited or low. These 8 ways are tried and tested methods, and if followed clearly, will help you pay off debt in a matter of months or years, depending on how large your debt is. 

Now, you may ask why you should listen to me? These suggested methods have personally been my tried methods to clear off huge credit card debt in as little as 2 years. What’s more, I cleared off my debt without too much strain on my usual expenses.

I didn’t learn debt management in a day, but that doesn’t mean you have to spend years decoding the best ways to manage debt. Try these 8 tested ways, and let me know if they helped you move closer to your dream of a debt-free life. 

So what are these 8 ways to pay off debt with low income or limited income? Read on. 

Create a Budget, Use an Expense Tracker



Right after you have decided to be consistent about debt payment, it is time to create a budget for the next 6 months. If you are still not tracking your expenses, it is high time to start using an expense tracker.

There are loads of expense tracker apps in the AppStore and Google Play Store market (a blog post coming on that soon!) and you can trial a few and select the one that you feel will be easy to use and manage.

If you are more comfortable keeping an expense journal, go ahead and do that. Whatever be your chosen method of tracking expenses, start keeping a note of expenses on a regular basis. 

Most expense tracking apps come with an inbuilt budgeting section. You can create a month to month budget or make one for the coming 6 months.

A budget must be created keeping in mind that you are allotting 50-70% for expenses like utility bills, grocery, allocating to parents/children. 20% of the income must be for debt payment.

Check on Debt Payment Terms & Charges


If you have debt from different sources, like credit card debt, banks or loan from a friend, prioritise which one you need to pay off first. 

Depending on what the terms of the debt are, you should start prioritising them. For example, you should pay off credit card outstanding every month on time. Not doing so will accrue interest upon interest.

If you have a loan taken from a friend, you can plan to pay him off bit by bit without stressing about accrued interest rates. If it is a debt to a bank, check if there are charges for lump-sum payment or any other form of hidden charges. 

Set aside for mortgage bills



If you have mortgage bills, they need to be paid off before the due date every month. Mortgage accrues interest regularly. Like credit card dues, mortgage payment must be prioritised if we are planning to be debt free.

To ensure we are not failing mortgage bills, it is best to pay off the mortgage bill while paying for utility bills. If that is not possible, set a reminder (most expense trackers come with inbuilt reminders) to ensure that you do not add up a late fee. 

Use Credit Card Wisely


The average American has 4 Credit Cards. A lot of us take credit cards simply because we are offered. We do not give a second thought whether we need it or not. We do not also consider that whether we use the card or not, it comes with a yearly charge.

Most of us are not judicious with credit card usage either. We see things, we buy them with our credit card not thinking of whether our income will permit paying off the outstanding amount after 50 days.

If you have more than 2 credit cards for yourself, think again. Do you really need more than 2? Are you financially stable to pay off a huge collective outstanding amount at the end of the month?

Once you have successfully paid off the debt of one credit card, consider carefully if you need it. If not, discard it off. Create a habit of paying with a debit card in place of a credit card. Move over the trap of reward points and cashbacks. 

Cut Down on Consumerism



We read less is more. Every year we throw numerous things that we bought the last year. As a generation, we are addicted to consumerism.

So before making that new purchase, before going crazy for Black Friday sale, ask yourself if you really want that new cupboard, or if you really need to upgrade your phone or computer.

If the upgrade or the new cupboard is just going to be a decorative piece, just a want but not a need, chuck it out from your list. Prioritise your debt first – you can indulge later in purchasing items from your wishlist when you are debt-free. 

Let vacations and celebrations take a hike


Celebrations and Get-togethers are important. But when you are in debt, they can become an additional burden to your already existing financial woes.

Keep a low-key with your celebrations and refrain from spending too much.

You can also postpone your hiking and vacations plans. Even if you are a prudent traveller, travelling spells expense like nothing else. You have to pay for food, lodging, and what’s a vacation if you don’t buy some souvenirs for the folks back home?

Like I said before, prioritise debt payment before everything else. Besides, a vacation without any baggage of debt will be of a whole different kind altogether. Pay off debt first, relax later.

Get a second income



This is a super important method, and by far the most important one to get your debt paid off fast. This is what helped me to pay off my credit card debt. 

If you have a passion, you can convert it to a paying one. With remote working opportunities on the rise, getting a side gig is easier. 

You can choose from a wide range of skills – accounts, designing, coding, graphics, data tasks – there’s an entire world of scope for the serious worker.

Devoting a few hours to a part-time job or a side gig can help in paying off debt significantly. 

It is never late to learn; you can always brush up a skill learned long back and start utilizing it to earn a second income. 

Don’t involve debt in your life-goals


We all have our life goals involving career and relationships. However, if your major life goals involve debt, you need to change your approach to accomplishing your goals.

For example, if you plan to start a startup business, you must involve as less debt as you can. If it is your first business, you can look for funding and investors after you have tested out the market a little. Just a great idea does not usually make a great business always. 

The same applies to buying a house, and spending on your wedding. When buying a property, rely less on mortgages on loan. Try to save as much as you can so that you have less debt to pay. 

Similarly, spending a fortune on wedding and wedding preparations makes no sense if you have to think about repaying the debt as soon as you settle down.

The above 8 methods to pay off debt fast with a low income have consistency and prudence as their basis – Being debt-free is a great feeling. Start using these methods from today, and see improvements in your debt management 6 months from when you start. You’ll be amazed at how much you have progressed to paying off debt.

If you have some tricks up your sleeve to manage debt better, let me know!

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