These Steps Will Help You Pay off Debt When You Make Less Than $50,000/Year

A close look at a woman handling her bills. Saturday Aug. 24, 2018, in Cleveland, Ohio.
Carmen Mandato/The Penny Hoarder

Lots of us make less than $50,000 a year. We’re not doctors or lawyers or CEOs. We’re not the people who are buying luxury cars, first-class airline tickets or bottle service at the club.

We have to think twice every time we buy new shoes or a steak dinner.

And that makes it tougher to pay off our debts. Because the cost of living is so expensive, we rarely have much left to pay down the balances on our loans and credit cards.

You can still do it, though. We have some ideas for you.

Most of Us Earn Less Than $50K

A lot of us are in the same boat, you know. Roughly 70% of American workers earn less than $50K, according to the Social Security Administration. The average salary is nearly $47,000, but that average is a little skewed by the high earners who are pulling in six figures. The median salary — the one right in the middle — is more like $30,000.

Here’s a more painful statistic:

The average household with credit card debt has a LOT of it: $16,748, according to a survey by NerdWallet.

How can you possibly pay off your debts?

We’ve got tips for how to come up with the extra money you’ll need.

1. Let This Company Pay Off Your Credit Cards

When you think about how much debt you have, you might feel a little anxious — especially if you’re earning less than $50,000.

That’s where a company like Fiona can be helpful. It can help you find personalized lending options to refinance or consolidate your debt to potentially save thousands of dollars in interest.

Fiona will show you all the lenders willing to help you pay off your credit card and eliminate the headache of paying bills by allowing you to make one payment each month.

If your credit score is at least 620, you can borrow up to $100,000 (no collateral needed) and compare interest rates, which start at 4.99%. The idea is to secure a loan at a lower interest rate, potentially helping you save thousands. Repayment plans range from 24 to 84 months.

Take, for example, Katherine, who faced $12,000 in credit-card debt. Holding her back? The 15.24% interest rate. By refinancing with a 5%-interest, seven-year personal loan, she saved $12,000 in interest.

If she’d kept on the same road, she would have paid something like $14,000 in interest alone over 25 years. Yikes.

So even if you’re simply curious about what’s out there, know that checking rates on Fiona won’t hurt your credit score — and can probably save you in interest.

2. Find Out if You’re Paying Too Much for Car Insurance

If your credit score is at least 620, you’re probably overpaying for car insurance. And how would you know, really?

Have you shopped around lately? Have you compared rates from the 20 largest auto insurers that do business in your area? That sounds kind of difficult and time-consuming, doesn’t it?

Fortunately, a service called Gabi will do it for you, and you don’t even have to fill out any forms. Simply link your insurance account and provide your driver’s license number, and Gabi will go to work.

Once you link your insurance account to Gabi, it will:

  • Scan your existing insurance plan.
  • Analyze what coverage you have.
  • Compare the major insurers’ rates for that same coverage.
  • Help you switch on the spot if it finds you a better rate.

Gabi says it finds an average savings of $720 per year for its customers.

It is a true apples-to-apples comparison at the same coverage levels and deductibles you currently have. Once you sign up, you never have to shop again. Gabi’s software has your policy on file and keeps on monitoring for savings as your life changes.

3. Find Some Hidden Cash

Before you start hashing out a plan to tackle your debt, it might make you feel better to find areas in your life where you can save. Then you can funnel that money directly toward those outstanding balances.

Sure, a lot of us know how to save money on groceries, but what about everything else?

For consistent savings, download Truebill, an app that’ll negotiate your bills, cancel unwanted subscriptions and refund your bank fees. On average, Truebill customers get $12 in credits off their cable bills each month.

You can also try digging up some extra cash with Paribus — a tool that gets you money back for your online purchases. It’s free to sign up, and once you do, it will scan your email for any receipts. If it discovers you’ve purchased something from one of its monitored retailers, it will track the item’s price and help you get a refund when there’s a price drop.

One of our favorite ways to save on everything is with Ebates, a cash-back site that rewards you nearly every time you buy something online. For example, Ebates gives you 10% cash back on online purchases at Walmart. Plus, you’ll get a free $10 gift card to Walmart for giving the site a try.

Disclosure: Paribus compensates us when you sign up using the links we provide.

4. Earn Rewards When You Repay Your Debt on Time

When you were a kid, your mom probably gave you an allowance for washing the dishes and sweeping the floor. Now all you get for doing that is a kitchen that’s clean for, like, 15 minutes.

Now that you’re a grown-up, you no longer get rewarded for just doing the things that are expected of you — like, for instance, paying bills on time.

Not until now, anyway. MoneyLion, a free app for managing your personal finances, will reward you for things like paying your bills and monitoring your credit — even just setting up an account in the app.

Much like that childhood allowance, it’s basically bribing you to be good.

You’ll earn points in the app’s rewards program, and you can redeem them for gift cards to more than 15,000 retailers, including places like Walmart, Applebee’s and Amazon.

If you want to take it a step further and work on paying down debts, for example, MoneyLion can help with a loan to consolidate your debt and potentially reduce your interest rates. And it’ll reward you for that, too!

5. Start Saving Without Trying

Saving money is tough. So what if you could do it in a way where you wouldn’t even notice?

Digit makes that possible.

This innovative app automates saving for you. Simply link it to your checking account and its algorithms will determine small (and safe!) amounts of money to withdraw into a separate, FDIC-insured savings account.

Bonus: Penny Hoarders will get an extra $5 just for signing up! Additionally, savers will receive a 1% bonus every three months.

Using this set-it-and-forget-it strategy, one Penny Hoarder saved $4,300 without noticing — read his Digit review.

If you need that money sooner than expected, you’ll always have access to it within one business day.

Digit is free to use for the first 30 days, then it’s $2.99 per month afterward.

Bonus: Make Extra Money Hanging Out With Pups

If you’re looking for a flexible, independent way to earn money — and you love hanging out with dogs — Rover might be your perfect gig.

The online network connects dog walkers and sitters to local dog owners through its 4.9-star-rated app, so you don’t have to staple flyers on every utility pole across town.

Rover says sitters can earn as much as $1,000 a month.

Rover dog-sitter requirements vary by location. In general, you must:

  • Be 18 years or older.
  • Pass a background check.
  • Have access to the Rover app (iOS or Android).

Here’s how it works: You’ll create an online sitter profile where you’ll answer questions about your experience with puppers and your schedule availability.

You can choose to offer a variety of services, including dog walking, overnight boarding at your home or theirs and daycare. Boarding is the app’s most popular service, so offering it can get you more gigs. You set your own rates. (Rover keeps a small percentage as a service fee.)

Dog owners will reach out to you. Accept which gigs you want, then start snugglin’ pups. As soon as you complete a service, you’ll be paid within two days.

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