Your small business is finally starting to produce a profit. Congratulations! Read on to figure out how to get out of debt on a tight budget.
Believe it or not, you really can get out of debt on a tight budget.
It may seem impossible to you. But if you want it bad enough, you can see the other side of a mountain of debt in as little as a few months or years.
Even if you owe a large sum, there are ways to pay it off while your budget is small. As your budget grows, it gets even easier.
However, while you have limited means, you should look into how you can get out of debt on a tight budget. The more research you do, the better prepared you will be for this undertaking.
Read on for our best tips on getting to be debt free and finding a life of financial freedom.
How to Get Out of Debt on a Tight Budget
While it would be easier to get out of debt on a large budget, it’s possible to get out of debt on a tight budget.
People do it all the time. You don’t have to wait for your big break to finally pay off your debt.
Stop sitting around hoping to win the lottery. Instead, figure out what you can do to get your debt paid off as soon as possible. Look up small business loans for bad credit and start a business to supplement your income.
Eliminate Unnecessary Costs
Whenever you can make even more room in your budget for funds that are going toward paying off your debt, do it.
Eliminate spending on anything that is not absolutely necessary. You don’t need a clothes and shoes section in your budget. You certainly don’t need a happy hour budget either.
What you do need is to get out from under the pile of debt that is suffocating your soul. Put all the spending you want to do on frivolous items toward paying off your debts and living a life of freedom.
Downsize Your Life
Downsizing, or bootstrapping, goes beyond just cutting out unnecessary costs. This step is even more proactive.
Now that you’ve rid your life and budget of everything that seems unnecessary, you have to go after the things that you feel are necessary.
Ask yourself: what’s left in your budget that is not absolutely required to keep you alive?
For example, haircuts may seem necessary, but they’re really not (at least not for women). If you’re a man, maybe your spouse can learn to buzz your hair for you. If you’re a woman, it won’t hurt to let your style grow out a bit.
Buying gifts for people seems necessary. But why not pick them flowers and deliver a hand decorated birthday card? Netflix and cable TV may seem like luxuries you can’t live without. But a lot of the world does it, and you can always read a book or visit with friends.
When you hear about situations like paying off over $26,000 worth of debt on a $35,000 salary in just a year and a half, you may feel very skeptical. While it’s difficult to do, it really can be done! Those who want to get out of debt on a tight budget can pull off whatever they put their minds to.
It may take some creativity, but you can downsize in many categories that you wouldn’t normally consider cutting into. However, you’re going to have to if you really want to pull off the impossible.
Save, Save, Save
As you work to find a life that’s debt free, you’re going to need to change the way you spend and live. You’ll be saving more and spending less, and your hobbies and interests may have to change, too.
The first step is to stop using debt or accruing more: cut up your credit cards if you must. Don’t take any more loans, and don’t even consider it in the future.
You’ll also want to establish your emergency fund in this process. Any money that’s not going toward your debt should be set aside — not spent.
Open up a separate account that you invest into every month. It could save you in case an emergency arises.
Things like accidents, illness, or unforeseen expenses happen all the time. Don’t let an unexpected situation keep you from achieving what you’ve set out to do.
Live Cheap and Stand Strong
Sure, you may have to live below your desired standard of living for a while. You may feel like you could afford more, or you may feel ashamed around friends or family who have more monetary flexibility.
Don’t let this get in the way of your goals. You’re in charge of your life and you have to make decisions that are right for you, no matter what the people around you are doing. Stand strong!
Imagine the sense of freedom you will feel when you are actually rid of all of your debt. Imagine how good it will feel to start over, to start fresh, to not have that burden hanging over your head.
It may be frustrating when your friend buys a flashy new car and you’re stuck in an old clunker. You might feel lonely when all your friends have gone out to party and you’re hanging back so you don’t overspend.
These situations are hard, but they are worth it. The sooner you get them over with, the sooner you can join in with your friends and feel as happy as ever knowing that you did the responsible and helpful thing.
The most important factor needed to get out of debt on a tight budget is to want it more than anything else — including those expensive nights out and lavish vacations that you wish you could take.
Get More Advice!
Want more small business insight or additional advice on how you can get out of debt on a tight budget? We fetch the best of the best small business news and other important information.
Subscribe to our newsletter to get it all delivered straight to your inbox!