How To Get Out Of Debt On A Low Income

What to do when you have debts
but low income, or none at all

I Don't Make Enough Money to Pay My Bills and My Debts. What Should I Do?

What do you do when your income and your debts are far apart? Perhaps your income has stopped altogether, but those monthly bills from AMEX or MasterCard keep coming. You've done all the math, and there is just no way you're going to make those payments. This creates a very stressful and unhealthy mental and emotional state. The first thing you need to do is not allow your health to be jeopardized by your financial situation. As Ira Gershwin wrote, "The things that I prize like the stars and the skies all are free!"

The fuel of depression is inaction. There are things, such as settlement, debt dispute and more potent measures that you can and must do to move forward and create hope for your recovery.

First, though, is to get a solid picture of where you are. I recommend you take 15 minutes to run our Debt Planner - Credit Card Calculator to get the numbers.

If you have some income, then consider working with a Debt Settlement company to reduce the debt to a manageable level, while protecting your credit as best you can.

Keeping First Things First

If you don't have enough money to pay all of your obligations, you will have to choose what to use the money you do have for.

• Most important is your home and your food
• Close behind is your ability to travel
• Take care of your basic utilities, especially heat in the winter, water and electricity

Depending on the severity of your situation, you may need to change where your home is. Finding a less expensive apartment, or selling a home for something much less expensive can buy you a significant amount of time to re-balance yourself.

When we say "Most important," we mean that those expenses must be paid no matter what. Even if it means neglecting a credit card payment, so be it. Your health and basic welfare are the most important things in the world for you.

Why Budget If It's a Lost Cause?

If you are asking this, you need to change your mindset. Napoleon Hill, author of Think and Grow Rich, stresses the importance of faith in bringing in riches. There is a story about a man who prays for rain, and claims that he really believes in the power of his prayer. "So", another person asks him, "Where is your umbrella?"

Budgeting serves two purposes. It focuses you on faith that your situation will improve, and there is a reason to budget. It's your umbrella. Second of all, you will discover that you can save a lot of money in many different ways. Less trips to the restaurant, buying less processed foods and more healthy natural ingredients, getting rid of unnecessary cable channels and the like can add up to hundreds of dollars a month. Remember keeping first things first, home, food, transportation, and then take a good hard look at the rest. Hopefully it will only be temporary.

Psychology is a powerful tool in getting out of debt.

What If I Can't Even Maintain My Home and My Food?

Our society does not leave people behind. There are government programs to help people in need, and there are private ones. Religious organizations, churches, synagogues, mosques, what have you, all preach the importance of charity. Do not be embarrassed about asking for help, because someday you will be back on top and then you will be the one giving the help.

What about My Credit Cards?

In almost every case, credit card settlement is imperative. It is also a far better alternative than personal bankruptcy. Bankruptcy has risks involved, and is an intense legal process. It is really a last resort, must be done in consultation with a qualified legal authority.

Settlement, negotiation and reduction, are far superior. Credit card companies would rather receive something than nothing, and they will be willing to accept pennies on the dollar, in some cases, in order to get that something. While debt settlement acknowledges you can't pay your full debts, it is much easier and cleaner than attempting a personal bankruptcy.