How to Get Out of Debt on a Limited Budget

• January 9, 2017

Do you desire to get out debt and become debt free, but you feel that you limiting budget could be sabotaging your efforts? Well, you are not alone and there are thousands of people in Canada who have used their limited budgets together with the tips we share below to not only get out of debt, but become better managers of their finances. Here are some important tips that will see you do away with all your debts, irrespective of how limited your budget may be:

Develop a payment plan

With a limited budget, having a sound payment plan is the genesis of getting out of debt. Determine how much debt you are in and note all the lenders whom you owe money to. Order the debts in order of priority, starting with the most pressing ones to the least pressing ones. Then determine the amount you can comfortably pay off every month. When you do this, it will be easy for you to have a clear picture on how you will execute the repayments on a monthly basis.

Consider setting up automatic deductions

When on a limited budget, it is easy to think that a small payment may not make a bigger difference. However, it is vital for you to set up automatic payment deductions so that you don’t fall into the trap of not meeting your debt repayment commitments.

Cut costs

Cutting costs sounds obvious when you need to get out of debt and you are on a budget, but surprisingly, most people never consider it as a viable tip. Start by evaluating your monthly expenditures to determine the items you can do without or the ones you can change. By cutting your expenses, you will have more available funds which you can channel towards the debt repayments. For instance, you don’t have to be eating in restaurants, subscribing to premium cable channels, paying expensive gym membership fees etc.

Change your spending habits

You are probably in debt because you were never keen on how you used to spend your money. One of the sure ways to get out of debt when you are on a tight budget is to be conscious of your spending habits and change the bad ones you might have picked up over the years. It is thus imperative to stop spending aimlessly if you really want to get out of debt.