7 Ways to Destroy Debt Even If You’re Living Paycheck to Paycheck

7 Ways to Destroy Debt - Even when Living Paycheck to Paycheck!

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Accumulating debt has become a common occurrence in most families – but paying off debts, even on a low income has become an achievable goal for visitors to our website. If you are looking for ways to destroy debt forever, then this article will encourage, equip and empower you!

Debt Free on a Small Income. On an average household income of less than $45,000, we’ve avoided debt and been able to pay off our home mortgages in record time. To do it, we’ve used many of the methods described in this blog. Follow these 7 Steps and you could be debt-free too!

Accumulating Debt is Easy. It’s amazing how easy it is to accumulate thousands of dollars in consumer and other debt without having to think much about it. Each month you’re a little bit short thanks to a $50 expense here and a $30 expense there, and after a few years, you’ve got thousands in accumulated debt.

That debt comes with payments, and having to make those payments month after month, year after year can take a serious emotional toll on a person and on a family.

If you are struggling with debt you might feel alone, helpless and like you don’t have any control over where your money goes each month.

Are things getting really bad? Are you having trouble making minimum payments? Are you tired of creditors calling to bully you into making payments you simply can’t afford?

Creditors aren’t usually very nice. They might berate you for “shirking” your responsibilities or hurl other insults or threats at you.

You might get a sick feeling in the pit of your stomach every time the phone rings, or every time you pick up the mail. You may feel scared and alone, wondering how things got this bad.

There is hope!

Please keep reading (or watch the video at the bottom of the page); there are practical things you can do starting today.

7 Steps to Destroy Debt Forever

Overwhelming debt balances and payments are tough to deal with, but fortunately, there is a way out even if you are really struggling for money and behind on your payments.

If you can muster up the strength to follow these 7 steps (and we know you can), you will destroy your debt and clean up your credit report (see Step 5 for lots of resources) so you can once again be in control of your money and your life.

Are you ready? Let’s do this.

Step 1: Get Sick and Tired of Your Debt

You’ve got to get to the point where you are seriously fed up with your debt situation. If you can embrace our motto, “Debt Destroys, but Frugality Frees,” you’ll be facing the right direction.

Already at the end of your rope? That’s terrific news; you’ve already got step one down!

If you’re not already at the end of your rope, give yourself a mental boost to get there. Imagine what your life would be like if you had to deal with minimum payments and calls from creditors for another five or ten years.

Imagine another decade of denying yourself your dreams because you’re saddled with all of this debt. It might feel “normal” to live this way, especially if you’ve been living this way for a long time, but living in fear and dread is NOT normal.

It may have become your “normal” but it doesn’t have to stay your normal. There is a better way. A life without debt. A life without fear and dread. A life where you never have to worry about money again.

Imagine that life.

Imagine a life where you can buy groceries and other necessities without fear of overspending again. A life where vacations, cars, and home repairs are paid with cash from your savings account instead of by raising your credit card balances another few thousand dollars.

Are you sick and tired of debt yet?

Good. Let’s move on to step number two so you can kick your debt to the curb once and for all.

Step 2: Create a Game Plan

You probably didn’t plan to get into thousands of dollars of debt. Your debt balances didn’t accumulate overnight – they took some time to accrue. And it’s going to take some time to get out of debt—many people we’ve helped have eliminated consumer debt in about 18 months by following our plan.

Assess Your Situation

Getting out of debt is going to require you to think differently. You’re going to have to start viewing debt as the enemy to all of your dreams.

You’re going to have to do some work to understand why you’ve been overspending for so many years. This might involve coming to terms with old emotional hurts or fears, or with misconceptions about money and wealth.

It will take some time to work through these old hurts and misconceptions, but identifying them and thinking differently will give you a much greater chance of winning at the debt elimination game.

Tell yourself, “Spending more money won’t help me feel better.”

a. Acknowledge That There’s a Problem

The first step to beating a problem is to acknowledge that it’s there.

Please believe us, It’s not “normal” to live paycheck-to-paycheck. It’s not normal to have a car payment and to owe credit card balances. The world may say this, but people who are financially secure will tell you a different story.

We’re hoping that you can face the fact that you have a spending problem. Then embrace the truth that you deserve, and can have a better life.

And here’s how to get there . . .

b. Make a List of All Debts

Get out all of your credit card bills, loan payments and anyone else you owe money to (including relatives). Make a spreadsheet or a paper list of them all. List your debts from the smallest to the largest (disregard interest rates, just focus on the total owed to each creditor).

List the name of the creditor, the minimum payment, and the full balance, so that you have an accurate snapshot of your debt.

Don’t panic if it’s worse than you thought. You now have a clear understanding of your situation and can take control as you start working this plan.

c. Analyze Your Expenses

Yellow sheet of paper with columns of bills to be paid.

If you want to get out of debt really fast you need to evaluate what you are spending your money on. Make a list of the bills you pay every month, and decide which are needs, which are wants and which could possibly be reduced by changing providers or moving to less expensive options.

Keep in mind that some “needs” might be more expensive than they have to be. For instance, you might “need” cable TV to get good reception, but you can live with a minimum cable package and cut all of the extras. Maybe you could go with a less expensive cell phone provider – it’s time to question everything.

The goal is to reduce expenses, so you can start to generate a monthly excess of money, and use it to eliminate your debt.

If you start to feel deprived as you cut expenses, remember that it’s only temporary and that you’re doing this to create an awesome, debt-free financial future.

Now comes the fun part: paying the debt off. Here’s how it works.

Step 3: Start Using a Money Management System

Cash envelopes for kids and adults

Many people panic at the talk of creating and sticking with a budget. They don’t like the idea of having restrictions on their spending. But the truth of the matter is, a budget will give you the control that you’ve always longed for with your money.

There are several choices for money management systems. For online or app budgeting there are Mint, Good Budget, and YNAB. If you’d prefer a more secure, less hack-able option, check out the system we have used since day one of our marriage —America’s Cheapest Family Budget System.

Our budget system along with the Good Budget and YNAB (You Need A Budget) help you accumulate money in your bank account in several budget categories. For instance, they help you save for your rent or mortgage with each paycheck, and for groceries and auto insurance by taking a little money from each paycheck and putting it in a specific budget category.

Money-Saving Tip: Quoting your auto insurance every 2 or 3 years can really save you some cash. We like using the website Gabi – it takes a few minutes to enter your info and they’ll give you quotes from multiple insurance companies. It’s super easy and saves you time and money.

Use the Excess to Start Paying Off Debt

As you cut and manage your expenses you’ll start seeing extra money in your bank account each month. Use that extra money to start paying down your debts.

Pay every creditor something – at the very least, pay the minimum payment. Then take all of the excess money you’ve generated and pay it on your smallest debt. Most people can have their smallest debt paid off in 3 months.

This is where paying off debt gets exciting!

When the smallest bill is paid off, use the money you were paying on that bill to start destroying the next smallest debt. You’re going to feel in control and excited as each debt is paid off.

This is one of the fastest ways to gain emotional victories and eliminate debt faster.

Using your money management system with each paycheck will help you see where every dollar goes and will keep your spending under control so you CAN eliminate debt. And you’ll feel less like a victim and more like a victorious DEBT DESTROYER!

Step 4: Get Your Credit Report Along with Your Credit Score

FICO Credit Score

Your FICO Credit score is a calculation that takes into account several factors including on-time payments, credit usage ratio, length of history, credit inquiries, and your mix of credit.

Getting your credit report is an important step because knowing your credit score and what’s on your credit report will help you to have a clear and accurate picture what you really owe.

Annual Credit Report gives out one free credit report per person, per year, but you have to pay extra to get your actual credit score.

If you want to get your credit score for free, you can check out the website listed below in step 5.

Step 5: Clean Up Your Credit Report

You might find errors on your credit report. Things like old, unpaid bills that you forgot about or paid-off debts that still show up.

Companies such as Credit Sesame allow you to get your credit score for free (no credit card required) at any time, and can help you identify errors on your credit report.

Great Money Saving Idea

Get your credit score for free from Credit Sesame
(no credit card required)



If you find errors or old unpaid bills on your credit report, you should work to repair it. Just make sure as you clean it up, that you keep good notes. Write down the specific person you speak with at each creditor and what was said. If this sounds overwhelming, you might consider using the services of a credit repair company (see b below).

a. Negotiating with Creditors for Lower Payments

You may be able to do some negotiating with your creditors for:

  • Smaller, lump-sum payoffs
  • Interest rate reductions
  • Waived fees and penalties

If this sounds overwhelming it might be easier to work with a credit counseling firm like Money Management International to negotiate with your creditors.

b. Hiring a Credit Repair Service such as CreditRepair.com

There are companies that exist to help you repair your credit. The people at CreditRepair.com are pros when it comes to eliminating unfair or negative comments and ratings from your credit report.

Many times as people work to pay off their debts, they come face-to-face with uncooperative creditors unwilling to help them make things right.

This is where a credit repair service can be helpful. Creditrepair.com is not a counseling firm, they are a subsidiary of Lexington Law, a law firm. They are experts and know the credit laws inside and out.

They have a 3-step process to clean up your credit.

  • Evaluate your credit report.
  • Challenge any questionable items.
  • Get your credit report changed.

On average their clients see about 10 percent of their credit report negatives removed each month.

They have lots of great testimonials on their site – real people who have seen great changes to their credit reports. You’ve got to hear Petillo Jones’s story about how he got hooked on credit cards in college and it wasn’t until he went to buy a car that he realized how bad his credit habits were.

They have 3 different plans. Their middle plan is just $99.95 a month (a lot less than it would cost to hire a lawyer on your own). In just a few months your credit report should be looking much better.

When you hire the experts at CreditRepair.com you send them the information and they do the work for you, reducing your stress and cleaning up your credit report.

Get a Free Credit Consultation

Credit Repair is offering readers of this blog a Free Credit Report Summary, Credit Score & Consultation

Step 6: How To Generate Extra Cash

A for sale by owner sign sitting on the windshield of a car.

Another part of a solid debt payoff plan is generating extra income. You can do this by selling things you own that you no longer need or want. Read this blog about the best ways to sell things online.

Do you have medical insurance reimbursements that you haven’t submitted? What about uncollected business expenses or Health Savings Account reimbursements that haven’t been turned in?

All of these and others could be found money that can be used to pay off debt.

Generating extra income will give you more money to throw at your debts. Imagine how quickly your debt would be paid off if you could find an extra $100 or $500 each month to make extra payments with.

Step 7: Trim Unnecessary Expenses

This is an effortless way to find more extra for paying off debt. You might not be aware of how those little expenses you pay each month really do add up.

You can cut spending in many areas like spending less on groceries or reducing entertainment expenses such as movies and eating out.

You can also get quotes on your auto insurance from GetMyInsurance to see if you can get a lower rate. This could save you $50-$200 a month without impacting your lifestyle one bit.

Check out Trim to help you reduce expenses. Trim is a free service that searches out monthly, bi-annual or annual charges that you may no longer need or want. They help you get them canceled, saving you money.

RELATED ARTICLE: Places That Will Cash a Personal Check

Check out This Popular Video that Gives you More Ideas on How You Can Destroy Debt FOREVER

Killing your debt off is an awesome goal that can be accomplished with focus and commitment. A life without debt leaves you free to spend your money the way you want to!

Personally, we applied many of these steps in our pursuit to become mortgage-free. In our first home, we destroyed that debt in 9 years. We then sold that home and put the proceeds (minus a little that we saved for upgrades) into our new home. We paid our second home off in 15 years – we were on track to pay it off in 10 years but slowed down the process when we started our own business. Oh, the celebration we had when we made the final payments was glorious!

Killing your debt will take some work, but the end result will be an awesome celebration; one that you can pay for with cash.

Send us a message once you get that first debt paid off – we’ll cheer for you. And the momentum you gain from there will be unstoppable!

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This content was written by MoneySmartFamily.com to help you with your finances. This post contains links to some advertisers and affiliates who may pay us a small commission or fee if you purchase their products. This money is used to keep our website and free email list functioning.

5 thoughts on “7 Ways to Destroy Debt Even If You’re Living Paycheck to Paycheck

  1. Carla W.

    I’m not sure why you included Step 5 in this article “7 ways to destroy debt”.
    It sounds like you’re just putting in a free advertisement for that company.
    If you want to destroy debt why do you want to repair your credit score?

    1. Steve Economides Post author

      Carla, that’s a great question. Lexington Law sponsored this post. We believe that most people can repair their credit if they work hard enough. There are some people who are so beaten up by creditors that getting some help is probably the only way they can get the bad marks on their credit removed. This is particularly important if they’re in the market for a mortgage. Our preference would be to never borrow money, except for a small amount for a mortgage … and then pay it off quickly.

    1. Steve Economides Post author

      Anita – that’s a great question. We don’t recommend consolidating debt initially because most people who are struggling to make ends meet may start spending more money if their monthly payments decrease through debt consolidation. But if the person has been using a spending plan (budget system) for about 6 months and have been generating an excess of money each month, then consolidation might work.

      Basically, using a system to manage your money will help you stay within your spending plan and as a result, the lower monthly payments will allow you to pay your debts off faster.

  2. Elizabeth Mateo

    At this point, I’m very happy using a credit repair company. They have gotten my credit where it needs to be. Over the past few days, I have watched as one by one the old negative items on my report have dropped off and my score went up and to excellent. I thank them for their hard work and will recommend their services to everyone as they also help with clearing debts.

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