How to Pay Off Debt When Living Paycheck to Paycheck

“How Do I Pay Extra on Debt When I am Barely Keeping My Head Above Water?”

I hear this question so often from people who have committed to getting their finances on track and creating a budget. After the budget is written down and the “extras” have been trimmed. They are still just barely getting by each month.

You can feel the despair in their voice and it makes my heart break. At some point, most of us have been here. That time in your life when you are holding onto hope by the last string.

I absolutely want to give this person an “easy” answer. Unfortunately, there is not one. The most important thing you can do in this situation is to hold onto hope. You are a lot better off because you have a plan and you are not digging further or faster into debt.

How to Pay Off Debt When Living Paycheck to Paycheck

Establish an Emergency Fund

Start saving that extra $5 here and that extra $20 there. Put it away in your savings account or a safe place that is not easy to access. This money is ONLY for an emergency. This life line is going to save you from going further into debt. If you are “normal,” you will use your emergency fund multiple times throughout your journey.

Do not give up on your debt freedom goal if the car breaks down or someone needs to go to the doctor. Use your emergency fund and then build it back up, so it is ready for the next emergency.

Increase Your Income

Do everything in your power to increase your income. Pick up an extra shift at work or add a couple hours of overtime. If you are long over due for a raise and you are a valuable asset to your employer, ask for a raise!

Pick up the odd job here and there. Babysit, walk dogs, yard work, clean houses. Any odd job you can get your hands on. An extra $100 could be the difference in starting an emergency fund or not having enough to cover this month’s bills.

Sell Something

Sell something, anything, everything. If you have items around the house no longer in use, sell them! A large garage sale can easily bring in a couple hundred dollars. This may be the jump-start your budget needs to pay off a small debt. Allowing enough wiggle room for you to afford your monthly bills.

Down Size

If your monthly expenses are just too much for your income, consider down-sizing. Could you sell your house or rent something smaller and less expensive? Could you sacrifice for 6-12 months living in a one or two bedroom apartment to create “extra money” in your budget to pay down debt? Remember with a smaller home, your utility expenses will decrease too!

Do you have auto loans? Could you sell the car with the loan and buy a clunker that will get to and from work for a year while you pay off debt? Could you be a one-car family? We are! It is definitely inconvenient at times, but it saves a lot of money!

I know several families who have lived with relatives for a year or so to pay down their debt. Would this be something you would be willing to do? Sacrifice for the short-term, to get your finances on track, pay-off debt, and stop living paycheck to paycheck.

Seek Help

If you are unable to make ends meet each month there is help! Please do seek out temporary help while you get your feet back on the ground.

There are many federal, state, and local programs which can help with housing, utilities, and food expenses. Typically there are income qualifications with these programs.

If you are a military family, please do not hesitate to contact your family/community readiness center on your military installation for possible assistance programs. Military installation also provide FREE financial counseling. These trained professionals can work with you and your spouse to create a budget and plan to tackle your debt. Please take advantage of these FREE services!

If you are a civilian family here are a few resources:
Utility Expenses: contact your electricity/gas/water service providers and they can often direct you to available grants or a local AFI Project
Food Expenses: Supplemental Nutrition Assistance Program (SNAP), Supplemental Nutrition Program for Women, Infant, and Children (WIC)
Housing Expenses: Department of Housing and Urban Development

There IS Hope

If you are struggling to find extra money to pay down your debt, there is hope. Short term sacrifices, for long-term gains. Lots of prayer and hold onto hope. All your hard work will pay-off. One day at a time, one dollar at a time, one debt at a time. You can do this!

What has helped you pay off debt when you were struggling to make ends meet?






Debt to Wealth: 3 Years into Our Journey  The Most Critical Trait of Your Debt Free Journey  Tips to Plan a Budget on a Low Income

Shared at: One Project at a Time, Thrifty Thursday, The Thrifty CoupleCouple, Frugal Friday,


14 thoughts to “How to Pay Off Debt When Living Paycheck to Paycheck”

  1. Im lucky enough to be handy with a sweing machine and make small items ( novelty cushions, tote bags) and some larger ones, quilts etc which I sell to friends and colleagues. Its really helped with cash flow over the last year.

    1. That is a great way to create a little extra cash flow to help stretch your budget and get your finances on track! Best wishes on your financial journey!

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