Home Credit Card Debt Handling Credit Card Debt on a Tight Budget

Handling Credit Card Debt on a Tight Budget

Published September 2021 by Jordan Semprevivo
Tightening budget

Being on a tight budget does not mean that you have to learn to live with debt. Find out what you can do to reduce and eliminate debt on a tight budget.


Key Points:

  • You can reduce and eliminate your credit card debt even if you’re on a tight budget.
  • Focus on reducing your spending and your interest rates.
  • Use a credit card debt relief method such as the Snowball or Avalanche method to reduce your debt.
  • Seek professional help if you can’t handle your debt on your own.

Mismanaged credit card debt can eat up your income quickly, regardless of how much you make. If you don’t earn much, it’s more tempting to accept that you may never get out of debt.

However, you should never give up on your financial future under any circumstances. No situation is hopeless. With the right approach and good money management going forward, you can pay off debt on a tight budget.

How do you approach your credit card debt problem on a tight budget? Do you look for help right away, or should you give it a try on your own?

Your tight-budget debt management plan should include the following action items:

  • Reduce your spending and save more, so you can make heftier payments toward your debt.
  • Try to lower your monthly payments and get lower interest rates.
  • Protect your credit score from damage.

Take Stock of Your Current Credit Card Debt Situation

Just as you would do if you were headed on a road trip to a new destination, you have to know where you are before you plot a course to where you want to be. You need to know what debts you have and which to address first. Make a note of each of your credit cards and other loans, along with the interest rates you are paying on each. Sometimes seeing your debt on paper or on a spreadsheet can help you figure out where to begin on your journey to freedom from debt.

A solid budget is at the core of every debt management plan because it gives you the tools to cut your expenses and redirect money toward debt payments. You can do your monthly budget with this free template.

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Stop Using Your Credit Cards for Purchases

In addition to paying more than the minimum payment on each of your credit cards, the best way to lower your bills is to stop using your credit cards for purchases, if possible.

That does not mean you should cancel your credit cards, though. By closing your credit cards, you may alter your credit utilization ratio and shorten your credit history, thus hurting your credit score.

Cut Your Expenses

The point of a budget is to help you achieve a financial goal. Since your current goal is debt repayment, you have to save as much money as possible.

Review all your non-essential, discretionary expenses and give them a healthy trim. For instance, if you are saving to pay off debt, consider eating in instead of eating out. Consider ways to cut your entertainment expenses, such as trimming down your streaming services or getting rid of cable services. Trade in your gym membership in favor of working out at home. Be creative in finding ways to save.

You can also optimize your recurring, essential expenses. Set the thermostat to a more wallet-friendly mode, and try to complete your grocery shopping for less. Check your car insurance rates and get quotes to see if you can get the same coverage for less with another company. Sell the possessions that you no longer need. Optimize your life from a financial perspective.

Be Proactive about Reducing Your Monthly Payments

Sometimes you can achieve incredible results by being proactive. Reach out and try to reduce your monthly payments by all possible means.

Don’t be afraid to call your creditors and ask for reduced interest rates. After all, the worst that can happen is that they can say no. You never know what creditors may offer until you ask, especially if you have had a good relationship with them for some time.

Pay more than the minimum payment when possible. The more you pay now, the more money you will save on the interest that you will never incur. Pay your bills in full if you can.

If your credit score is good, you might be able to reduce your interest rates through a balance transfer credit card or a debt consolidation loan.

Focus on Paying off Your Debt

Think strategically about paying off your debt. If your outstanding debt is less than $5,000, try the avalanche or the snowball method of debt reduction.

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Snowball or Avalanche your way to freedom from debt.

With the snowball method, you pay off your smallest balances first. This way, you can make visible progress from the beginning and motivate yourself to keep going.

With the avalanche method, you pay off your most expensive debts first. That means the accounts with the highest interest rates. Then, as you finish paying one card, you simply work on paying the next highest interest rate card, and so on.

When to Get Professional Debt Relief

When you owe $10,000 or more, you may need professional help to get out of credit card debt. Professional debt relief includes strategies such as:

Credit counseling and debt management plans help you pay off your entire debt-load by offering you a viable roadmap and trying to make you stick to it.

Bankruptcy should be considered a last resort for relieving your debt burden, as it has detrimental consequences on your credit score.

Through debt settlement, a firm such as ClearOne Advantage negotiates the forgiveness of some of your debt, giving you significant savings. If you are on a strict budget, you may find this solution particularly appealing.

How much can you save through a Debt Settlement Plan? Call a ClearOne Advantage Certified Debt Specialist at 866-481-1597 and get a free savings estimate today.

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Topics: Credit Card Debt