7 Strategies for Paying Off High Debt on Low Income

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  • In 2016, Dyana King had a debt of $35,000, which was more than her annual salary at the time.
  • She used many methods to pay it back, including refinancing, using tax refunds, and consistency.
  • She has been debt-free since 2020 and now coaches other low-income single mothers on their financial goals.

In September 2016, Dyana King decided it was time to take control of her finances, get out of debt and start building generational wealth for her two young children. She lived paycheck to paycheck and owed about $35,000 combined in car loans, student loans, credit card bills and personal loans.

By 2020, King had finished paying off all that debt, and today she has a positive balance sheet.


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close to $80,000 according to documents reviewed by Insider. She also teaches other low-income single moms how to get out of debt and build wealth, through her YouTube channel and blog, Money Boss Mama.

Achieving his goals was not easy. At the start of her “debt-free” journey, King was earning just $32,000 a year, or about $15 an hour, the only source of income for her and her children. She used seven strategies to get out of debt while living on a low income.

1. Pay in small installments

King told Insider that one of the reasons low-income people resign themselves to debt is that it takes longer to achieve their goals with limited means and it becomes exhausting to try.

When she started budgeting, King was down to just $60 at the end of the month after paying her bills, giving her about $15 more per month to pay off her debt faster. But nevertheless, each month she was paying $15 more towards her car loan repayment.

“Did that help a lot? said the king. “No, but it got me used to staying consistent and having that discipline to send that extra money, and I know that was a game-changer for me.”

2. Use tax refunds and bonuses

King was able to pay off more of her debt during tax season when she got her refund.

“A lot of us have extra income like tax refunds or bonuses, and we don’t see that as an opportunity to leverage our debt,” King said. “I did it – I went out and screwed it up, and it was gone in two weeks.”

She used most of her tax refunds for her car loans. Later, she would also start receiving additional incentives from her job every month or two. She also received COVID-19 stimulus checks which she earmarked for her debt.

3. Refinance with a credit union

After making regular extra payments for her car loans for a while, she noticed that her credit score had jumped about 100 points, to 705. She took the opportunity to refinance her car loans with a credit union. popular.

His car loan originally came with a monthly payment of $495 and had an interest rate of 9.2%. When she refinanced, her interest rate dropped to 2.6% and her monthly payment dropped to $345.

“Needless to say, it saved me a lot of money,” King said. However, she maintained the $495 payments she was making before, so the debt would disappear faster.

4. Roll over your credit card balance

The next step King took in her order to reduce her debt was to roll over her high-interest credit card debt to a new card that had an introductory APR rate of 0%, which she was able to do. after her.


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“I find that very helpful for anyone on a low income, because if you’re battling with that interest, you basically keep the same balance,” King said.

5. Focus on earning more

“I had to take a side hustle because my income wasn’t going to cut it, especially with the kids,” King said. “Writing is something I went to school for and love to do. People always ask me for help with their research.”

So King started thinking about how she could monetize this skill. “I got into freelance writing and it made me about $200 to $400 more every month,” King said. “And obviously some of it was to go towards monthly expenses – but the rest I applied to paying off additional debts.”

Along with getting a secondary hustle, King also focused on getting a promotion in order to increase her overall income. In August 2018, she got the promotion she was working for and her salary was increased from $32,000 to $50,000 a year.

6. Get paid for unused PTOs

King also leveraged payments from his work as a curriculum and course developer for unpaid PTOs. “With my business, anything we can sell in over 80 hours – so I would store the PTO,” King said. “If my kids had appointments, I wouldn’t stay all week to make up time.”

However, King told Insider that she doesn’t often recommend this strategy to people and admits that this particular method can be extreme.

That said, every time she racked up 20-40 hours of PTO that she could resell, she would get another $500-$800 in return.

7. Take advantage of the interest freeze on student loans

King said student loans were one of the last things she focused on, starting in 2018. She paid it off at the end of 2020, when she became completely debt-free.

She started out with about $20,000 in student loan debt, but the reason she was able to pay it off so quickly was partly due to circumstances beyond her control: Interest and student loan payments were frozen. during the pandemic.

During the break, King continued to make payments and was able to reduce the principal amount of the loan.

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