Tackling Big Debts on a Small Salary

Editor’s Note: We recently posted a success story about a young guy who paid off more than $100k of student debt in less than five years. We thought it was a great story, but we got some pushback, because not everyone felt they could relate to the specifics of his story. We still think it is a great story, but not all great stories involve six figure debt or six figure salaries. So here is an equally encouraging story of hard work and discipline, on a smaller scale, from guest blogger, Bailey Kay.

In the summer of 2014, I was 21 years old, had just graduated from college and was eager to get a job and an apartment,…. until the reality of my student debt hit me—all $23k of it.

The dreaded student loans, a car loan, one maxed-out credit card, and even a personal loan—yikes!—had all added up so quickly. Without knowing all that it would require, I decided I didn’t want to carry the weight of my financial mistakes into the next stage of my life. I wanted to be able to live a life that wasn’t controlled by debt.

Today, on the cusp of a new year, I’ve managed to pay off more than $17k of debt in the last 17 months. I’m not done yet—there’s still $6,500 of student loans to go, but I’ve made huge progress, especially considering I only make $24k/year at my full-time job.

I don’t have rich relatives, and I didn’t win the lottery, but I did learn some things that helped along the way. And I hope they will provide a little encouragement to you if you are facing big debts on a small salary:

Every Penny Counts

It’s really true—every one. It was so easy to give every dollar a job with YNAB because I could move my money from one virtual envelope to another.

If I had extra money in a budget category in a given month,
I’d move it straight to my “Debt Snowball” category.

There were times when I paid my debts with very odd amounts of money, but hey, that’s one less penny I owe someone else!

Short-Term Sacrifice, Long-Term Gain

Some sacrifices were small and some were big, they come in every shape and size and look different for everyone, but it’s your attitude that mattered most. Even if I was sacrificing something more comfortable or more fun, I knew my choices were temporary, and ultimately moving me toward the thing I wanted most: freedom from debt. Only spending $15/month in restaurants? I can do this!

More Work = More Money

Toward the beginning of my debt-free journey, I picked up a second job at a bookstore on evenings and weekends. I worked (and continue to work) 50 hours per week, and during the Christmas season, it was as many as 65 hours a week. I’m tired. I don’t get to see my friends. Sometimes I would cry in my car in between shifts at my jobs, because I was so tired, and I knew I had to do it all again the next day. But I absolutely could not have made the progress I did without that second job and I’m thankful for the lessons I learned in the midst of it.

Free Fun Can Still Be Fun

Instead of going to the movie theater, I’d rent movies from the library or stream a movie at home. Instead of killing time at the mall, I’d go for a hike, or a bike ride or a picnic. During the Christmas season, I’d drive around town to look at the Christmas lights or go to a church play. I didn’t feel deprived of fun, I just had to be more creative. And that turned out to be part of the fun in and of itself!

Extra Money Isn’t Extra

Every extra dollar went straight to debt. This includes income from my part-time job, holiday bonuses, extra paychecks (my company pays bi-weekly, meaning we get 2 extra paychecks per year), and even birthday and Christmas cash. When you are in debt, there is no extra, you are working from behind.

Don’t Waste on Food

It’s surprising how little you can spend on food if you really try. I brown-bag my lunch to work and very rarely go out. It isn’t always the easiest option, but it’s become my new normal. Now that I’m used to spending pennies instead of dollars on my meals, I’m not sure I’d go back!

Find Some Roommates

Even if it is your mom! I’ve been incredibly lucky to live with family, only paying a very small amount of rent. Living at home has strained my relationships, and I dream of the day when I live on my own, but this was a sacrifice that was worth it for me. Even on the days when it is hard.

Celebrate the Small Stuff

I celebrated every milestone along the way, from the day I completed YNAB’s Rule Four and was living on last month’s income, to the day I paid off each debt. The celebrations weren’t always big (okay, they were never big), but they helped remind me that I was making progress, reaching a goal and conquering my debt.

Everyone’s situation is different. But you can pay off debt—even if it is slow at times—on a small salary. I’m living proof.

Bailey blogs about her life as a Human Resources professional and Army wife at BecomingBailey.com. In her free time, she loves reading and cuddling with her cats, Frankie and Gracie.