Paying Off Debt With a Lower Income: What I’ve Learned and How You Can Do The Same

Paying off debt can be a struggle, no matter what your financial situation. But if you have a limited income and you’re juggling multiple jobs, it can seem completely impossible. I’ve been there, and it felt daunting. But now, as a personal finance writer, I still hear this question all the time: 

“How am I supposed to pay off debt when my income is low and varies at times? Is it even realistic?”

Those are important questions, and that’s a tough place to be. But it’s also a situation I know personally. So I want to share a little bit of my debt story to give some practical tips and realistic action steps that anyone can take right now to start digging their way out of debt. 

I used to get paid a modest salary, and later, I earned income that fluctuated, which sometimes made budgeting feel like a cruel joke. 

But I’m here to tell you that paying off your debt is possible; you just need the motivation to get started.

When I started my debt repayment journey, I was making around $40,000 per year, and I owed roughly $10,000 on my car (with a 15.5% interest rate) and $20,845 in federal student loan debt. I also didn’t have much of an emergency fund or any savings to fall back on. 

I was a young, single mom at the time and didn’t want my son to grow up seeing my stress about money and struggle with debt for several years. But when I laid out all my debts and bills to see what I actually owed and what I needed to pay each month, that’s when it actually clicked. 

I couldn’t fix what I wasn’t willing to face.

So here’s something you can do today:

• List every debt you owe
• Write down the balances, monthly payments, and interest rates
• Identify which debt is costing you the most

Seeing all of these written down might make you feel a little uncomfortable, but it will put you back in the driver’s seat.

Once you lay out how much debt you owe and who you owe, it’s important to look at where all of your money is going each month. When I first looked at my spending, I realized that a lot of my financial stress came from not having an actual plan for my money. 

Since my income was lower, I wasn’t spending a ton on things like takeout and subscriptions, but there were definitely some splurges in there. And there were also some necessary bills that I knew I could lower if I took the time. 

If you haven’t already, sit down and create a monthly budget so you know exactly how you plan to spend your money. To make it a little easier, here’s what I recommend:

• Track the last 30 days of your spending (this is great for creating realistic spending categories based on what you actually need)
• Highlight needs vs. wants
• Build a basic budget where your income is assigned a purpose

Once you compare your spending to your income, you may find that there’s little to no room left for debt payoff. This is okay, and I’ll discuss what to do here in just a bit. But you may find out that there is some money left over (whether it’s $75, $150, or more) that’s getting eaten up by unexpected or frivolous spending. 

Either way, you’ll feel much more confident in managing your income when you have a clear picture of your finances and a budget in place.

When you’re looking at a big debt balance and your income feels tight, it can be discouraging. But the key is to break down your debt payoff goal into easier steps and create a plan that you will actually follow. 

For example, $20,000 of debt may look like a huge number, but you can break that down by committing to paying it off over three years. Maybe you pay down $6,000 the first year, then $8,000 the next year, and then tackle the remaining $6,000 in the third year. Already, that doesn’t seem as daunting, and it also helps to choose just one debt at a time.

The key is to break down your debt payoff goal into easier steps and create a plan that you will actually follow. 

Once I understood my debt and spending, I chose a goal I could stick to: Paying off my car loan. I knew it had a high interest rate, so any extra dollar I paid toward it would help out that much more.

Then I broke it down. My plan looked something like this:

• Minimum payment every month
• Add $50 to $100 extra whenever I could
• Throw side income directly at the balance
• Apply tax returns, bonuses, and any “windfall” money to the loan

After a few months, the progress felt addictive, and I started to look for other ways to free up money to pay it off.

You don’t need to go completely frugal or minimalist to pay off debt. You just need to create enough margin to breathe again.

Here’s what I cut out of my budget when I started:

• Cable (saved over $80/month)
• Eating out as often
• Expensive phone plan (I switched to prepaid)
• Higher-priced grocery items
• Random beauty and retail splurges

These cuts helped me save $150 to $300 every month without feeling deprived. I redirected those savings directly to my debt. You may not be able to do exactly what I did, but here are a few things you can do (or commit to) to get the ball rolling:

• Cancel or downgrade ONE expense this week
• Plan meals at home (this was huge for my budget)
• Compare phone and internet providers and look for better deals
• Make a “do not buy” list for the month

Even small changes can be much more powerful when you have a lower income.

Now, what really changed everything for me was earning extra money. That could mean getting a job for a few hours a week or turning something you enjoy into a side hustle that pays. I leaned into something I love: writing.

I picked up small freelance projects. Some months, I only made an extra $50, but others I made hundreds of dollars. Every single dollar of that extra money (after taxes, of course) went toward my debt.

Many people already have a second job (approximately 8.9 million Americans, in fact), but I think it’s still important to keep your eyes open for opportunities to earn more. Maybe that looks like picking up a few extra hours when you can and putting that money toward debt. 

Or, it could mean leaving that second job for a better-paying opportunity when the time comes.

More income can give you breathing room each month — and the funds you need to get out of debt faster.

Some months, it’ll feel like you’re crushing your goals, and others you’ll feel like you can barely keep up. When I was deep in my debt payoff journey, I didn’t let the small things trip me up. Bills popped up, I overspent on groceries, and faced numerous setbacks. 

But none of those things stopped me from getting to the finish line because I just kept going. Forward momentum is the key to success, no matter how slow you think you’re going.

One thing I didn’t expect when I started paying off debt was how much lighter I’d feel emotionally. When I wasn’t constantly juggling payments or worrying about overdrafting, I started to breathe easier. I wasn’t waking up in a panic about due dates. 

I had more mental space, and I finally felt like my money started working with me instead of against me.

And that’s just the emotional side. The financial benefits are even more powerful. Every time you lower a balance, you improve your cash flow. Your credit score benefits, too, because you improve your payment history and can lower your utilization ratio by paying down debt. 

Over time, paying down debt helped me qualify for lower interest rates, better financial opportunities, and a level of stability I’d never experienced before.

I know you can get there, too. Every payment, every billyou lower, and every extra dollar you put toward your future adds up. Debt doesn’t have to define you, and if you commit to getting rid of it, your debt doesn’t stand a chance.