A reader has some debt, but no savings. Thankfully, he has several excellent options.

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Question: I don’t have a lot of debt, but I also don’t have a lot of money. I think I got $5,000 I’m carrying on a couple of credit cards. I also got $12,000 in student loans to go. My car is paid for, and I live at home with my parents until I can figure out how to live on my own. My job is steady, and it has decent benefits, but it pays only $22,000 a year. How do I save money and stop living paycheck to paycheck?

— Anthony in Georgia

Howard Dvorkin answers…

First of all, allow me to reminisce for a moment. Back when I began my career as a financial counselor in the 1990s, $5,000 was considered a significant credit card balance, and $12,000 in student loan debt was still a rarity.

Times have certainly changed. The average credit card debt by household in this country is more than $16,000, Debt.com reports. The average student loan debt is more than $50,000.

So according to these statistics, you’re right, Anthony. You don’t have “a lot of debt.” However, as you’re learning, any debt is a drag — not only on your current financial situation, but you’re future one, too.

Even worse, when you earn very little, the interest rates on your debts chew up a bigger percentage of your income. So the first step is curtailing some of those interest rates.

To accomplish that, try these three options and in this order…

1. Make a budget and stay within it

Anthony, you say you think you have $5,000 of credit card debt. You need to know. The best way to do that: Create a budget. Yes, it’s as boring as it sounds. It’s also as important as it sounds. Read How to Create a Budget and Stick to it.

2. Cut what you can

Now that you know what you bring in and where it all goes, you can intelligently look for ways to save. Shaving a few dollars off a workweek worth of coffee doesn’t seem like much, but once you have a budget and can note how it adds up, you’ll be motivated to do more. It’s akin to dieting: Every calorie counts.

3. Get a professional assessment

If you’ve read Debt.com before, you know I’m a huge proponent of credit counseling — and why not? It’s free. A certified credit counselor calls you and conducts a financial assessment right on the phone. From there, you can make informed decisions about your finances. Learn more about free credit counseling services.

These three options are just the beginning, Anthony. If you start here, you’ll quickly learn advanced techniques that will save you even more — like how to reduce your student loan payments. First things first, however. Start here, do well, and I can promise you that financial freedom is attainable.

Have a debt question?

Email your question to editor@debt.com and Howard Dvorkin will review it. Dvorkin is a CPA, chairman of Debt.com, and author of two personal finance books, Credit Hell: How to Dig Yourself Out of Debt and Power Up: Taking Charge of Your Financial Destiny.

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Meet the Author

Howard Dvorkin, CPA

Howard Dvorkin

CPA and Chairman

Dvorkin is the author of Credit Hell and Power Up, founder of Consolidated Credit, and Chairman of Debt.com.

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Article last modified on March 23, 2018. Published by Debt.com, LLC . Mobile users may also access the AMP Version: How Do I Stop Living Paycheck to Paycheck? - AMP.