How do you solve debt if you have a tight budget? This is probably what a lot of people are trying to do. And for sure, it can be a very stressful situation to be in. One survey revealed that 6 out of 10 respondents admitted that having a huge debt balance causes them a lot of stress. Imagine having to face all of that debt with limited finances resources?
It can really put a lot of stress on your life. It can make your budget feel strained. It can keep you from enjoying your income because you will feel guilty about spending. You know that you need to put more effort into paying off your debts.
Once you start feeling guilty, unhappiness and discontent follow. And you what that will lead to? It can also damage your relationships. It can make you feel irritable and that can translate into how you act around the people close to you. If they feel the strain, it can result in more fights and short fuses. Instead of supporting each other, it might lead you to a lot of disagreements. So make sure you are vigilant about how you react to your debts.
It may be hard to solve debt if you have a tight budget, but it’s possible to do it.
How to solve debt with a tight budget
You don’t have to feel like there’s no hope even if you have limited financial resources. In fact, the steps that you have to follow is quite simple. It only involves 3 steps to solve your debt even if you have a tight budget.
Create a frugal budget plan
Start by looking at your budget. Whatever budget plan you were using before – that can no longer be used. You have to change that into a frugal budget. That is the only way you can solve your debt fast despite your limited financial resources.
And this sentiment is actually not unknown to some people. In fact, it is revealed that a lot of Americans feel like frugality is now a necessity. They feel like this is one of the things that will make a partner attractive.
Being frugal doesn’t mean you will be living a cheap life. But frugality is actually about spending on your priorities. You will identify what is important to you and what really makes you happy.
That is what you will use as a basis for your frugal budget plan. Rank your expenses according to priority. It should be according to what you feel will make you the best version of yourself. Not only that, but it should also help you get closer to your goal. And if you have a lot of debts, one of your goals should be to pay it off. You need to make sure it is on top of your frugal list. After all, you are creating this frugal budget so you can afford to solve debt even with a tight budget.
Negotiate your debts
Once you have created your frugal budget, you need to look at your debts. Analyze each one so you can negotiate them. If your finances are tight and you expect that it will be like that for a long time, you may want to talk to your creditors and lenders. Ask them to make your repayment plan easier. It is possible to restructure your debts so you can lower your monthly payments without being charged with late penalty fees. But you have to ask them first. If your current financial situation is temporary, you might even be able to ask them to allow you to pay only the interest. That is possible but you have to discuss it with them.
Just make sure that if you will propose a repayment plan, you should be able to afford it. Make sure you can stick to the payments. Because the new repayment plan may no longer be honored if you cannot commit to it.
Find a debt relief program
Finally, after you have successfully negotiated your debts, you need to choose the right debt relief program that will help you stick to your payments. There are options that will help you get fast debt relief. But there are also options that will ensure you will have a lower monthly payment. You need to choose which debt solution fits your current financial situation.
Since you have a tight budget, the best debt relief option for you is probably the one that will allow you to pay a lower amount each month. But if you have some savings that you can use, offer it as a lumpsum payment. Ask the creditor if they will allow you to settle. To pay only a portion of the debt using the lump sum amount. Whatever is left will be forgiven.
Make sure the debt solution that you will use will suit your financial situation. That way, you will be sure that you can afford your payments and it will help you save the most money.
Improve your payment capabilities to solve debt faster
Apart from the three steps, there is also one thing that you need to do to solve debt faster. You need to improve your payment capabilities. Obviously, if you can no longer afford your debt payments you need to give your finances a boost.
How can you do that? There are three things that you can do.
Start by spending less – a lot less than what you used to. If you follow through with the frugal budget plan, this should be easy. You can lower your spending by getting rid of the expenses that are not important. If you don’t need to spend on anything, keep the money. You can use that to help pay off the debt despite your tight budget. Just add whatever you can save towards your debt payments. That way, you can get out of debt faster.
You can also try to earn more. Spending less will be limited. That means you can only cut back on spending so much. If you really want to increase your debt payments, you have to start earning more. This is actually a good thing because it will not just help you with your debts. If you can set up another source of income, you won’t have to worry about your having a limited budget. You can increase your payments, that is the first thing that you should do. But it can also help increase your budget. Once you have paid off your debts, you can use that extra money to give your finances a boost.
Stay away from new credit
Finally, this is what you really need if you want to solve debt. You have to stop using it. This is only temporary. You want to make sure that you will not add to the balance that you owe. If you keep on using debt, your situation will never end. You will just keep on paying because you keep on adding to your balance. If you are feeling the burden of your debt payments, deal with that first. Pay it off completely. Only after you have done that can you use debt again. And if you use credit once more, make sure that you will learn how to use it properly.