How Can I Cut Debt When I Don't Make Enough to Pay the Bills?

by Linda Richard, Demand Media
    Use strategy to cut your debt and pay bills.

    Use strategy to cut your debt and pay bills.

    When you can't reduce your debt, it is time to start thinking like a grandpa and copying his generation's money management habits. Gramps makes do with what he’s got and buys used when he needs something. He keeps his head down and his ears open at work. He saves money to make purchases and buys when he has enough money to pay cash. Gramps knows that a vacation every few months sets you back financially and that shopping is expensive entertainment. Use Gramps as your guide to stretch your money and your mind to cut your debt and pay your bills.

    Spending

    Separate your wants from your needs and put yourself on an austerity diet. Learn to save as aggressively as you spend. Cut your personal wants spending to zero and apply all the money that you would use going out, shopping or traveling to your debts. When you add debt to existing debt, you don’t know how much you owe; you can’t make headway because the lender is adding interest each month based on the total you owe. If you quit waving your credit card, you can eliminate additional debt and attack old debt.

    Work

    A good work ethic can get you ahead. Keep your mind on your work and do the best job you can so you’re in line for promotions and raises. Making more money per hour helps you pay bills and cut debt. Some young couples find an extra job for the short term and apply all the extra income to reducing debt. Sell items you can do without at a garage sale or through the local newspaper. Be creative in finding extra income streams to pay down your debt.

    Plan

    Organizing your bills by the highest interest to the lowest interest identifies the largest leak in your money stream. Additional interest and service charges add to your debts when you don’t on time. Pay the minimum payment on every bill every month, but pay extra on the debt with the highest interest so you can pay it off first. After it’s paid, pay extra on the bill with the next highest interest charge. Keep a daily record to account for all your money, including extra income and cash. Review your spending weekly to identify cost-cutting measures. Quit your expensive habits like drinking or smoking and use the money to pay down bills. If you still can't pay your bills, contact your creditors and let them know. Ask for a reduction in your interest rate and for suggestions. Remember that refinancing may give you more time to pay but adds interest on the account.

    Work Together

    Combine your abilities as a couple and give the most frugal person input on all financial decisions. Pool your thoughts and resources to see if two can really live as cheaply as one. Discussions about money are an important part of bonding and long-term survival as a couple. Paying debts needs to be an individual goal as well as a family goal, as your credit rating is at risk and that affects your future. Even if you maintain separate accounts and bring separate debts into your relationship, make your financial future together a joint effort.

    About the Author

    Linda Richard has been a legal writer and antiques appraiser for more than 25 years, and has been writing online for more than 12 years. Richard holds a bachelor's degree in English and business administration. She has operated a small business for more than 20 years. She and her husband enjoy remodeling old houses and are currently working on a 1970s home.

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