Effective Debt Reduction Tips and Strategies for Low Income Earners

If you are living on a limited budget, it's quite possible you are in some sort of debt. Living on a fixed and low income is difficult and can take some creative work. If you are in debt and don't have many funds to pay it off, it's still possible but will take some effort.

The first thing you need to do is add up all your debt. In order to get out of debt, you need to know how much you owe. Make a list of your creditors and the amount you owe noting what needs to paid off first. Listing them in order of importance such as rent, food, and utilities can help you decide how to divide your payments.

If you don't have a lot of money to pay off your debts, selling some items you own can make some extra money. Search through your attic, your house and garage for items that you either don't need or use anymore and have a garage sale. Selling online is another way; sites like eBay can find many buyers all over the world. Bear in mind you do pay to list on this site and then pay a percentage of the sale price as well. Always add at least part of the shipping cost to the item to make the item appear more attractive to buyers. You can then use this money to pay off some debts.

If your position is severe, selling off larger assets like a house or car may be required until you can get yourself into a more financially secure position. You can use public transport and rented accommodation until this happens.

It might be a good idea to look for a second job that you can work around your current employment. The best way to do this is by analyzing what skills you have and how you could best put these to use in a part time job.

One strategy is to pay off in full your smallest debts first, leaving you with more money to service the larger debts. You still need to make sure you are meeting your minimum payments on credit cards or other loans.

Finally you need to work out a budget and stick to it like glue. Having a plan is no good if it doesn't get used. Always try to put away at least a little bit of money as savings - you never know when a rainy day fund will come in handy.