It already challenging to make debt consolidation successful. But what if you are only earning a minimum wage? Do you think you can still succeed in using this option to get out of debt?
Government statistics reveal that there are 1.7 million workers earning the federal minimum wage or below. Although this is only a small percentage of the 81.9 million hourly-paid workers, that is still a lot of people. How can you expect to live off a salary of $7.25 an hour? What is worse is the fact that some of these people do not even work 40 hours each week. It is bad enough to get a weekly salary of $290 before taxes. If you work fewer hours, it would even be lower.
How can you expect to live off that amount and still be able to make debt consolidation successful?
Tips to make debt consolidation successful
This will probably be one of the hardest things that you will do. But if you will have to suffer living off a minimum wage, you want to make sure that you are proactive about improving it. One of the things that you can do is to keep paying off your debts. Without debts, it will be easier for you to use your income to try and improve your financial position.
Here are tips that you can use to help you make debt consolidation successful despite less than favorable income situations.
Make a bare-basic budget plan
Start by looking at how much you really earn after taxes. Once you have determined the exact amount that you take home, it is time to create a bare basic budget plan that will help you pay off your debts. This budget will focus on expenses that are only necessary for you to survive. And each of these expenses should be as minimal as possible. That means your food budget should only include the amount you will spend if you cook food from scratch. It can also mean bringing lunch from home to save on lunch money. It means sharing an apartment with other people so you can save on rent. Or moving back home with your parents so you can lower your housing expenses. The budget plan will focus on lowering your expenses so you will have enough money to pay your debts.
Find the right debt consolidation strategy
After you have created your budget plan, you should have an idea of how much you can afford as a monthly debt payment. This amount will help you decide on the debt consolidation strategy that you will use. Can you afford a debt consolidation loan? Or maybe a debt management plan is more applicable because the credit counselor can help you negotiate a lower monthly payment with the creditor. What is important is for you to use a strategy that you can afford and stick to no matter what.
Earn through side hustles
Most people earning a minimum wage are always looking for a better job offer that will pay them more. However, this is harder to accomplish in the near future. This is why it might be easier to get another part-time job – especially with the coming holidays.
With an increased income, you can make debt consolidation successful and your chances of improving your finances. Unfortunately, it is hard to consolidate debts when you are broke. With a minimum wage, you are probably one unexpected expense away from being broke. To avoid that from happening, you need to be prepared. Do not stop looking for better opportunities that will pay you more than the minimum wage.
Talk to your creditors
Finally, you should also opt to talk to your creditors to get them to lower your payments. You can either have them lower your interest rates or waive any penalty charges or fees. If that is not enough, you can declare that you are in a state of financial hardship. This way, they will allow you to make lower payments without penalizing you. Sometimes, they might even allow you to pay only the interest.
It will take some time to completely pay off your debts but it is not impossible. You just have to work with your creditors to come up with a solution that will make debt consolidation successful despite your tough financial situation.
How to live debt-free despite a minimum wage
The truth is, a minimum wage will put a lot of restrictions on your life. But with the right state of mind, planning, and self-discipline, you can build a comfortable life despite living off a minimum wage.
According to reports, the minimum wage today ($7.25/hour) is already lower than the inflation-adjusted equivalent 10 years ago ($8.70/hour). This is probably why people are pushing to have the minimum wage increased by up to $15 in a couple of years.
While having a higher salary will make your life easier, that does not mean you should continue to suffer because you are only getting the minimum wage. Here are some tips that will help you survive your limited financial resources.
Make a list of your expenses
Start by making a list of all your expenses. You can be as detailed as possible with this list. It is important to make a realistic list so you have to be honest when you are making this. You should also stick to the basic necessities and the other important payments that you have to make. If you want to make debt consolidation successful, you need to ensure that this will be included in the list.
Scrutinize even your basic needs
Once you have the list, you should analyze all the basic needs. Do not just remove the wants. Scrutinize the needs as well. For instance, transportation is a basic necessity. However, you can opt to walk instead of riding the bus. You might find the time you spend walking to be refreshing – especially if your route takes you through scenic places. Not only that, the time you spend thinking and the exercise may be just what you need to control your stress levels and keep your body healthy.
Look for freebies
There are a lot of stories about how people managed to survive on a minimum wage thanks to the freebies that they got. Some of them were all praises for their local libraries. The resources found here helped them satisfy entertainment needs without having to spend anything. As long as you are creative enough, you will find the means to get what you need without dipping into your wallet.
Save despite all odds
Finally, try to save as much as you can. Since you are trying to make debt consolidation successful despite your minimum wage, this might be near-impossible to do. But with determination, you can accomplish this. It does not have to be a big amount. You can save the coins left in your pocket at the end of the day. If, for instance, you give yourself a budget of $20 each day for daily expenses, anything that is leftover at the end of the day should be saved. Be strict about this. This small amount will soon grow to be an emergency fund that can save you from unexpected expenses.