How to pay off credit card debt with low income?

It has become a trend in most people’s lives, especially youngsters who live in cities, to spend most of their income on paying credit card installments. They use credit cards to buy unnecessary things in installments and make payments from their valuable income, which they earned by spending a major portion of their month. Buying things on credit cards became the biggest mistake of their life, and they realized it after a lot of time when they were completely driven into a debt trap. But in the end, realization is important, and there are no mistakes which we cannot overcome and solve.

Credit card in hand

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So in this article, we will discuss various methods you should use to become free from your credit card debt.

Method to get out of credit card debt

All the steps are essential, so read them properly. If you have a low income, you should follow these steps properly and thank me later after becoming debt-free. So steps to pay off credit card debt with low income are as follows:

#1 Analyse your expenses 

If you want to become debt-free, you first have to analyze your necessary expenses, only real necessities and avoid every irregular expense like movies, branded clothes, food from the restaurant,s, etc. After analyzing, subtract it from your income, and after that follow the second step.

#2 Avoid snowball method

Snowball method simply means a method in which you first pay your smaller debts and afterward move towards larger debts. For example, suppose you have two credit cards, Card A and Card B. You have to pay $100 on card A and $500 on card B. Now in the snowball method, you will pay the debt on card A first because it is just $100 and less than card B, on which you have to pay $500.You have to totally avoid it and follow the third step. Believe me, this method will never ever help to get debt relief quickly.

#3 Prepare a list of all debts

In the next step, you have to prepare a proper list of all your credit card debts based on the interest rate percentage. From the example in the second point, let us assume that the interest rate of card B is 12% and card A is 10%. Then in your list, you will card Card B above card A. It is important to analyze debt properly to move out from it quickly. So,  prepare a proper list and follow the next step.

#4 Make payments logically

Now in this step, you have to make payment logically on all debts. You will just make minimum payments on all the cards and will use the rest of the amount to pay the card’s debt with the highest interest rate. Since you have already prepared a proper list of all your debts based on the interest rate, it is easy to identify the debt with the highest interest rate. After completion of the first debt, move to debt with the second-highest interest and pay it completely. After that, move to third highest debt and so on. This is the proper way of debt management where you pay debts of high interest first to save a lot of money instead of making payment using a snowball method in which you just make payment on the smallest debts first.

#5 Take a loan in the worst case

In the worst case, if you do not have any money to pay the minimum installment of a credit card, then taking a loan from the bank or asking for help from parents or relatives is the last option to survive. I know it is very difficult, but in this case, we do not have any choice because you have to pay the minimum installments; otherwise you will bank employees will seal your personal property, and in my opinion, taking a bank debt consolidation loan is a better option than it because interest rate in bank loans is very less as compared to that of a credit card, so eventually there will be a chance that you will be able to pay off debts in future without facing any embarrassment in front of your parents or relatives.

#6 Start exploring more income-generating ways

It does not matter whether you are in the worst case or not. The reality is that you are facing a lot of problems paying off your credit card debt. It simply means that you are currently not earning too much, so you must explore more income-generating ways. So that you will not face this problem never ever in your life, and new income-generating ways will also help you pay off your credit card debt quickly.

You can explore ideas of both active and passive income. There is a lot of chance that you might be actively busy in any other work such as your job or business. So you should focus more on passive income. You can earn passive income in so many ways. For example, you can earn passive income from stocks, you can earn passive income from real estate, you can earn passive income from a business, and in so many ways. But you should avoid some investments in the stock market which are too risky and avoid some common failures in business if you want to earn extra income.

Summary

To pay off your credit card debt with a low income, you have to analyze all your expenses properly. After that, prepare a list of all your debts based on the interest rate and use your income to first pay off debt with the highest interest rate. In the worst case, take a loan from the bank or ask for money from your friends and relatives, and after that, focus more on building a passive income funnel so that you can repay the loan or money borrowed from your friends as soon as possible.

Conclusion

You need to reduce the usage of credit cards or completely destroy it if you want to get out of the debt trap situation and do not want to face this again in your entire life. You need to prepare a proper budget to eliminate all irregular expenses to save money and avoid the debt trap situation.

Focus more on new income-generating ideas, especially passive ones, so that you can easily become financially independent in your life and also earn a lot of money while sleeping.

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Frequently Asked Questions

What is the snowball method?

The Snowball method simply means a method in which you first pay your smaller debts and afterwards move towards larger debts.

How to pay off credit card debt quickly?

To pay off your credit card debt quickly, you have to analyze all your expenses properly. After that, prepare a list of all your debts based on the interest rate and use your income to first pay off debt with the highest interest rate. In the worst case, take a loan from the bank or ask for money from your friends and relatives, and after that, focus more on building a passive income funnel so that you can repay the loan or money borrowed from your friends as soon as possible.

What is the best method to prepare a list of debts?

You have to prepare a proper list of all your credit card debts based on the interest rate percentage. From the example in the second point, let us assume that the interest rate of card B is 12% and card A is 10%. Then in your list, you will card Card B above card A. It is important to analyze debt properly to move out from it quickly. So, prepare a proper list and follow the next step.

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