According to recent studies, the average American household has over $16,000 in credit card debt. If you’re struggling to pay off your debt but don’t know how to pay off debt fast with low income, here are a few tips to help you get started and fix your credit while you’re at it.

Tip 1: Evaluate your spending habits

One way to improve your credit score is to evaluate your spending habits. Are you overspending on frivolous items, or are you spending more money than you can afford on necessary items? You need to get the root of what you are spending your money on and what your priorities are in order to start fixing your credit. Taking advantage of modern technology and apps like My Flex Bot app can assure you not only organize your time and transportation well, but can assure you get the best prices. With it, you can customize filters easy and the bot does the job for you in the background, while you focus on other more important things.

Tip 2: Create a budget and stick to it

Creating a budget can be a difficult task, but it’s a critical step to take if you want to improve your credit rating. By creating a budget, you will be able to track your spending and see where you can make adjustments. 

Don’t be intimidated by a budget; all it really does is ensure all of your expenses can be paid with the income you earn. If your budget shows you don’t earn enough, try to reduce your expenses or find new ways to earn additional money. You can sell things you’re no longer using, start a side business, or cut back on the things that aren’t absolutely necessary even if only temporarily. 

Tip 3: Make a plan to pay off your debt

If you have limited income, it is important to make a plan to pay off your debt and commit to it. Any outstanding debt you have accrues interest which only raises the costs of the things you purchased. 

When you have a fixed income and every penny counts, you know how difficult it can be to cover these rising costs. If you need help, consider using a debt consolidation or credit counseling service. These services can help you get your debts under control and create a strategy for getting you back on track. Some services are low-cost or might even be free depending on your income.

Some low-cost or free services to consider include:

  1. Debt counseling services –  Debt counseling can help you work out a repayment plan with your creditors and can often result in lower interest rates and reduced monthly payments. This is a good option if you think you can follow a payment plan that will help you keep on track.
  2. Credit monitoring services – Credit monitoring services are a great way to keep an eye on your credit score and make sure you’re taking the necessary steps to improve it. These services can help you identify any changes in your credit history, track your credit utilization rates, and alert you if any new accounts or loans are opened in your name.
  3. Credit improvement programs – The name pretty much explains what it does. This is a program designed to help boost your credit score.  They can help you learn about the credit scoring process, identify your credit risks, and make smart financial decisions to improve your credit score.
  4. Debt consolidation options –  Debt consolidation options can help you combine multiple debts into one loan that you can pay off over time. This can reduce your monthly payments and save you money in the long run.
  5. Financial counseling – Financial counseling can help you understand your financial situation and make smart decisions about your spending, borrowing, and investing habits. This service can help you develop a plan to improve your finances and achieve long-term financial stability.

Tip 4: Monitor your credit report

Keeping an eye on your credit report every six months will help you identify any changes in your credit score or history that may need attention. If you find any problems, contact the credit reporting agency that issued your report right away.

Staying on top of your credit score will also give you the added benefit of seeing the ripple effect your small changes make to your finances to help keep you motivated for the long term. 

You can order your full credit report for free once a year from each of the three credit reporting bureaus: Experian, Equifax, and TransUnion. But you should also consider purchasing apps and software to help you budget as well as check your credit report without hurting your score. Some credit cards also offer credit monitoring for free so check to see if your accounts are eligible. The more you stay aware of your credit history, the more likely you are to make small changes that improve it every day. 

Tip 5: Brainstorm ways to reduce spending or increase income

We know it’s easier said than done but to improve your financial situation, start by brainstorming ways you can reduce spending or increase income.

There are a number of tasks you can do regularly that will help reduce your spending and bring in more money.

  1. Change your spending habits. – If you have limited income, it’s important to review your expenses and see where you can cut back. One way to do this is to look at your monthly expenses and see where you can reduce spending. For example, if you’re spending more than half of your monthly income on groceries, it might be worth considering switching to a cheaper grocery store chain or cutting back on the number of items you buy. Additionally, if you’re spending a lot of money on transportation costs (for example, commuting or car payments), finding ways to reduce that expense could save you a lot of money each month.
  2. Find small ways to increase your income. – When you have limited income, it can be tough to make ends meet, especially when paying off outstanding debt. However, finding new ways to increase your income, even if only by a few dollars a week, can go a long way toward lowering your credit utilization rate. Some options include selling off things you no longer use, flipping unused gift cards for cash, switching jobs, getting a raise, or starting a small side hustle. 
  3. Negotiate better terms with creditors or landlords. – If you have a limited income and your credit is not great, you may want to consider negotiating better terms with creditors or landlords. You can request a lower rent in exchange for a longer lease or request a review of your current interest rates to see if there are ways to lower them. This can help improve your credit score and reduce the amount you owe. You can also find a credit counseling service that can help you improve your credit score.

The bottom line

Getting out of debt can be difficult when you don’t have much money to go around, but it’s not impossible. By following these tips, you can start to fix your credit and get your finances back on track.