Tips for getting out of debt even if you’re low on income

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We’ve all been there, haven’t we? We start earning so big, and the cash starts flowing in like there isn’t going to be a tomorrow, only for us to wake up one day, and the tides begin to turn – your income streams become severely compromised. What felt like an endless pool of income, now feels so much like an insufficient source of livelihood. Yes, that big bad financial turnaround. Unfortunately, when things are going so smooth and rosy, nobody envisages a dark time following. As such, we lock ourselves on some big financial projects, take out loans with the hope of repaying in installments, seek out mortgages, and try out different financial packages. Once the income streams reduce or stop flowing, you hit rock bottom, and your debts become so overwhelming that you cannot even fathom how you’re going to deal with them. If you’ve ever felt like this, or even worse, trust me, you’re not alone. This scenario sounds a lot familiar with many people, but one thing that’s not so familiar with many is how to dig oneself out of such financial holes. 

So while you’re looking for ways to return to your financially stable self, you also have to adjust your day-to-day existence to reflect your new economic reality. In this light, here are a few tips to follow.

Create a survival budget

Even when your finances were in surplus, I’m sure someone must have suggested to you to create a budget and live by it. Well, whether or not you did doesn’t really matter. Because the type I’m talking about now is nothing like you’ve done before. Not only is this step crucial to the sustenance of your new economic status, but it is also vital in your debt battle. From your daily expenses to your financial diet, transportation costs to entertainment choices, and every other thing in between, you must be ready to hack down all costs. When you’re creating a survival budget, like this, the goal is to lower as many costs as you can so that you have enough resources to cover your real immediate needs, like debt. 

Prioritize your debts

Unfortunately, getting out of debt doesn’t come easy. If your survival budget still leaves you in the red, and you’ve still got a mountain of debt to deal with, then you may have to go the hard way and prioritize your debts. This is probably going to require some painful choices. For example, you may have to give up your car to keep your house. On the other hand, you may have to hold off on mortgage payments for several months so that you can face your other loans (auto loans, personal loans, business loans, etc.) squarely even if such acts might ruin your credit score and report in the longer run. 

Negotiate with your creditors

Once you discover that the tides have turned and you can no longer meet any of your financial obligations, you should seek out your creditors. Although some may not be willing to cut you some slack, there are still some lenient creditors who can be reasoned with. However, in the event that your creditor appears to be too strict, you should consider reaching out to an insolvency practitioner who can help you arrange an IVA (Individual Voluntary Arrangement) with the said creditors. However, keep in mind that while this arrangement is known for helping people manage their debts by spreading their payments over a longer period and at their own convenience, it doesn’t apply to every kind of debt, which means that you might need to first check with your insolvency practitioner which of your debt qualifies for an IVA arrangement. 

Explore other income sources

Take it or leave it, now is not the time when you start becoming choosy with jobs and opportunities. Whether you like it or not, you’re no longer the same financial tycoon you once were, and to prevent yourself from wallowing in debt while you work your way back up, you need to get creative and be open to every window of opportunity. Nothing is too small, as long as it takes you a step closer to being debt-free. This means that you should be ready to take up side hustles, trading opportunities, small business schemes, and other financial opportunities out there.