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  • Writer's pictureDaniel Rodriguez

Is paying off debt possible if I’m living paycheck to paycheck?

Control your spending habits to avoid going deeper into debt If you have a habit of swiping your credit card for every purchase, put it away. Borrowing credit to pay your bills and costs could increase the amount of interest you have to pay and push you further into debt. Paying with credit cards also makes it harder to keep track of expenses. Instead, live on the money you have on hand. After receiving your paycheck, portion out your bill payments immediately. You can automatically transfer and use separate bank accounts to compartmentalize your bills, expenses, savings and emergency funds. The next step is to strategize how to pay off debt with a tight budget.

Dealing with debt when you have no means to pay Attempting to overcome debt is not anything to be ashamed of. Millions of Americans are in debt, but fixing the problem is what matters. Below are just some of the ways how:

Use a debt consolidation plan A debt consolidation plan combines all your monthly debt payments into one single loan, helping to lower the interest charges you need to pay. It also makes tracking payments more manageable. However, this plan requires having a good credit score and a sufficient amount of income to pay. Because your total outstanding debt stays the same, making ends meet could still be difficult.

Filing bankruptcy If your debt has become so large that it is impossible to repay with your income alone, you may consider filing for bankruptcy. Personal bankruptcy can give you a clean slate and peace of mind by clearing your debts and freeing you from creditor harassment. Still, it does have its downsides. Your credit score may take a hit, and there is a chance you may lose some of your properties. Knowing the available options can help you avoid your financial burdens. However, your circumstances and ability to pay will determine the best course of action. If you are unsure what steps to take, consider consulting an attorney.

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