How to Consolidate Debt on a Tight Budget
Consolidating your debt can be a great way to make paying off a sizeable amount of debt a great deal easier on you. However, if you have a tight budget, then it still might not be as easy. Luckily, there are still some ways you can go about consolidating your debt on a tight budget.
Tally Up What Debt You Owe
Before you consolidate your debt, get together all of the necessary paperwork and tally up each individual debt you have incurred to know the grand total amount of debt you have altogether.
Another easy way for you to find out the amount you owe altogether is by making a request for a copy of your credit report. Your credit report will have a comprehensive list of all debts that you have currently incurred.
Put Together a Solid Budget
Once you know how much money you owe altogether, the next thing you need to do is come up with a budget if you have not already. Understandably, it may end up being a rather tight one.
However, even on a tight budget, you can still manage to get your debt consolidated and then get all of your debt paid off. Just make sure that you stick to the budget as closely as you possibly can.
Find the Right Consolidation Program for You
An important part of consolidating your debt is to find the right consolidation program for you. There are various kinds of loans you can take out that will help you funnel all of your debts into one easy to manage payment.
Just make sure that whatever consolidation program you go with has your best interests at heart, as there are many that will not. Some may do whatever it takes to get as much money as they can out of you – which you definitely do not want if you are on a tight budget.
Formulate a Plan While on a Tight Budget
Once you have a solid budget put together and have found a good consolidation program, it is time to formulate a plan to get you out of debt. By having a plan of attack, you do not have to wander aimlessly in the dark and hope you eventually get to where you need to be.
A plan can lay out a set of steps you need to take and times you need to take them at. The further along down the path you get, the more accomplished you can feel.
Cut Down on Expenses
When on a tight budget, it is important that you cut expenses however you can. The following are ways you can leave more money in your pocket to help pay off your debt:
- Limit how often you eat out or get takeout
- Cancel your cable package
- Get a cheaper cell phone plan
- Cancel magazine subscriptions
- Buy food in bulk or that’s on sale
- Cancel gym memberships
- Cancel weekly lessons of any kind (if they are not school related)
- Clip coupons
Increase Your Income
One of the best things you can do if you are working with a rather tight budget when consolidating your debt is to increase the amount of money that you have to work with. By increasing your income, you can alleviate a great deal of financial stress.
Ways you can do this include:
- Getting a second part-time job
- Become a ride share driver for services like Uber or Lyft
- Sell some items you do not need
- Start a small home-based business with skills and resources you have
- Do online surveys
- Work for odd jobs through Fiverr or TaskRabbit
- Bring in metal to recycling centers
Do NOT Make New Debt
When working with a tight budget and consolidating your debt, one of the last things you want to do is make even more debt for yourself. This will just bury you deeper and make things even more complicated for you.
One of the best things you can do is to avoid using credit cards. These little things are one of the biggest culprits with getting people into further debt.
Always Pay on Time
Diligence with paying back your debt is key when consolidating. You do not want to miss a payment, as this can cause a rate increase or extra fees. Paying on time might not always be the easiest thing to do, but it will heavily benefit you in the long-run.