How To Pay Off $20k Debt Faster With Low Income

The process of paying off debt can be drawn out and difficult, but there are ways to cut down on the amount of time it takes and become debt-free more quickly. The following is a list of the top three ways to pay off debt more quickly:

1. Pay More Than the Minimum Required

Always pay more than the monthly minimum on your credit card balance, overdraft, or credit line. If you only make the minimum monthly credit card payment, it can take an eternity to pay off the balance. This is because the majority of your minimum payment will be applied to interest charges rather than the principal balance. (i.e. the principal).

If you want to pay off your balance as soon as possible, you should pay as much extra as you can. Even an additional $50 per month is helpful. Use a financial calculator to determine how much you can save in this manner.

2. Spend less than you intended to spend

The majority of us have desires and desires that exceed our paycheques. You may have heard the ancient adage, “You can have almost anything you desire; however, you cannot afford everything you desire.” Because they tend to purchase what they want, when they want it, many individuals incur debt and remain in debt.

Even millionaires cannot purchase everything they desire. If you want something, do not purchase it unless you can afford it. If you can be temporarily contented with less than you would prefer, you can use the money you save to reduce your debt. By the time your debt is paid off, you will likely have adjusted to your new priorities, and you will be able to use the money you are saving for other financial goals.

Using cash as opposed to credit is a great method to reduce expenditures. McDonald’s has discovered that customers spend 56% more when paying with credit rather than currency. Credit card users spend 100 percent more at vending machines and on event tickets, according to studies.

Overall, studies indicate that individuals who use credit cards tend to spend at least 15 percent more on all purchases. If we apply this concept to a typical Canadian household that purchases everything with a credit card in order to collect points or cashback, they would likely save well over $3,000 per year if they only purchased items with cash (the points or cashback would be worth no more than $400).

Even if your savings are less than this example, you likely understand our point. If you want to get out of debt, leave your credit cards at home, use cash, and refrain from using credit until you’ve reduced your debt to the level you’re aiming for.

3. Repay your most costly debts first

One of the most effective methods for escaping debt is to make minimum payments on all debts and credit cards except one. Choose the debt with the highest interest rate and direct all of your excess payments towards eliminating it first.

As soon as your first, most costly debt is paid off, redirect all of the money you were paying on it to your next most expensive debt. Continue this process as you pay off each debt, and you will be left with the debt with the lowest interest rate. This strategy will get you out of debt swiftly, and as you see your progress, you will feel encouraged. There is also a variant of this strategy that many individuals find even more inspiring. It is also known as the Snowball Method. You can examine it to determine if it might be more suitable for you.

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3. Pay Off Your Most Expensive Debts First

Rather than purchasing a brand-new vehicle, invest in a high-quality pre-owned automobile. A male in the driver’s seat accepts the keys to his new vehicle.
Popular personal finance radio presenter Dave Ramsey once stated, “A new $28,000 car will lose approximately $17,000 of value in the first four years of ownership. You could achieve the same consequence by throwing a $100 bill out of your car window once per week.”

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The lesson here is that you can save thousands of dollars by purchasing a quality used vehicle instead of a new one. The money you save can accelerate your debt repayment. Visit your local library and consult Consumer Reports or Phil Edmonston’s Lemon-Aid to locate a high-quality pre-owned automobile.

If you decide to purchase a new vehicle, Consumer Reports has always recommended selecting a fuel-efficient, dependable vehicle and keeping it for 15 years. This will extend your dollars the farthest and prevent you from incurring debt, as you will have ample time to save for another vehicle.

5. Contemplate Becoming a One-Car Family

If your household has two cars, consider getting rid of one and walking, taking public transportation, or carpooling to work. By using only one vehicle, you can save thousands of dollars per year. The average vehicle owner spends over $9,000 per year on vehicle ownership and maintenance. If you use this money to reduce your debt, it will have a significant impact. However, before you go cold turkey and sell your second vehicle, you should test-drive this idea first.

Try commuting via public transportation, walking, bicycling, or carpooling for a while, and reduce your car’s insurance to cover only recreational use. If you decide to sell your second vehicle, the occasional taxi ride or rental car will not cost nearly as much as it would to retain it permanently. If there is any possibility that public transportation could work for you, this option is frequently 80% less expensive than owning and operating a vehicle.

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6. Save on Food to Pay Off Debt More Rapidly

Try stocking up on groceries when they are on sale, or go one step further by stockpiling when they are on sale and then skipping one grocery purchase per month and living off the food you have stored.

You can stockpile nonperishable foods such as canned products, cereal, and bread and meat that can be frozen. Filling your pantry when groceries are on sale and then skipping one grocery trip per month can reduce your annual grocery expenditure by up to 25 percent. By doing so, a family of four could potentially save between $2,300 and $2,900 per year. Applying these savings to your debts will unquestionably benefit you in the long term!

The key to this strategy is keeping an eye out for sales, stocking up on groceries only when they are on sale, and freezing them adequately. When you “skip” a grocery shopping trip, you will still need to purchase perishable items such as milk, fruit, and vegetables, but you should be able to forego the remainder of your usual purchases. If you are unable to skip a shop once per month, attempt once every other month. This can still save you a considerable amount of cash. Check out these tips for additional ways to save money on food.

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7. Obtain a second job and aggressively reduce your debt.

Getting a second job or consistently working extra shifts is a common method for many individuals to reduce their debt. This strategy for becoming debt-free is not applicable to everyone, but if you can make it work, you could be debt-free within a few years. To make this strategy effective, you must apply your entire surplus income to debt repayment. Working additional schedules or hours is also not necessarily permanent. Once your debts are paid off, you can consider downsizing once more.

You could also generate additional income to reduce your debt by capitalising on a hobby you appreciate or a set of skills you possess. Consider writing freelance articles for blogs, newspapers, media outlets, or freelance websites, if you are a skilled writer. Consider selling your handmade items on Etsy if you are creative. If you’re a tradesman, consider taking on additional work. (you may even be able to find websites that can help connect you with people who need your skills).

Some individuals use their homes to generate additional income. Is it possible for you to generate additional income by renting out your cellar, garage storage space, a room in your home (perhaps through Airbnb), or by taking in a student?

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8. Monitor Your Spending and Identify Cutback Opportunities

This can save some individuals nearly the same amount of money as a part-time job. You will not know how much you can save unless you attempt it. Over the course of a month, record what you actually spend, not what you believe you ought to spend. This exercise will fail if you are dishonest with yourself, but most people are astonished by what they discover about their spending. Once you have an understanding of your expenditure patterns, you should be able to identify areas where you can make cuts. Use the money you “discover” to reduce your obligations.

A budget and expenditure monitoring notebook next to a coffee cup and a phone.

9. Obtain a Loan Consolidation

Check with your bank or credit union to see if they can assist you in consolidating your consumer debts into a single loan with a single payment and a reduced interest rate. This can be a useful initial measure towards debt repayment. However, a debt consolidation loan will only be beneficial if you construct a budget that accomplishes the following:

It prevents you from incurring additional debt while paying off the consolidation loan.
It enables you to save a small amount of money each month.
If you don’t have savings, it’s likely that you’ll need to use your credit cards again midway through your loan, resulting in additional debt. The outcome could leave you in the same position as before or in a worse position.

After reviewing all of its debt consolidation loans over a period of years, a U.S. bank discovered that over 70 percent of borrowers were no better off financially after repaying their personal loans. This occurred as a result of the fact that these individuals did not address their underlying problem of spending more than they earned.

Consequently, the key to benefiting from a consolidation loan and making it a useful instrument is to use a spending plan (a budget) to ensure that you keep your spending under control and set aside some money each month for emergencies or unplanned expenses that will inevitably arise.

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10. Refinance Your Home Loan

If you own your property, you may have sufficient equity to consolidate your debts into your mortgage. If you have little equity in your home, additional mortgage insurance costs could be costly. Consider all of your options and request advice from a source besides your lender. (since they have a vested interest in getting you to choose this option). If a traditional bank or credit union is unable to assist you, do not rush to locate the first home equity finance company willing to lend you money.

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Instead, consult with a non-profit, credentialed credit counsellor first. Unknown to you may be alternatives to refinancing your home that are preferable. They can assist you in evaluating all of your options and developing the optimal plan to take you forward and achieve your financial objectives.

If you refinance your home and consolidate debts into your mortgage, you should consider the new mortgage to be similar to the debt consolidation loans discussed previously. It is crucial that you keep your expenses below your income (a budget is typically the best method to do this) and set aside money each month for savings. If you do not save money, “emergencies” will always entice you to borrow more money. Using your home as a bank machine repeatedly can set you up for a retirement filled with debt, no assets, and no savings. If you’re having difficulty with this, read on.

11. Consult a Credit Counselor – It’s Unpaid

Consult a credit counsellor if you are deeply indebted and struggling to make any progress in reducing your debt. Determine what programmes are available to assist you in managing your debts. A reputable credit counsellor will explain all of your options and assist you in selecting the one that makes the most sense given your circumstances. Most people are glad they took the time to learn what they needed to know about debt repayment programmes at non-profit credit counselling organisations before it was too late. Consultation with a non-profit credit counsellor is confidential, non-judgmental, and typically free.

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12. Develop a Spending Strategy

Okay, so the “b” word must come in eventually. A budget is essentially a spending schedule. It will assist you in staying on track with your existing debt payments or your new accelerated payments. A spending strategy is something you create to ensure that your expenditures are less than your income.

Some individuals claim they dislike budgets, but have they ever attempted one? Moreover, if you’ve lived without a budget for so long, how do you know you won’t enjoy having one? After experimenting with a realistic budget, most people concur that being in debt is much worse. Click here to learn how to create a budget. Additionally, we’ve developed a budgeting tool that will guide you through the budgeting process to make budgeting as simple as feasible.

These credit cards provide an introductory interest rate that is either very low or even 0% for a set amount of time, which can make it easier to pay off your debts in a shorter amount of time. Before you apply for a balance transfer credit card, you should make it a point to familiarize yourself with the fine print and any fees that may be associated with using the card.


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If you follow these guidelines, you will be able to pay off your debts more quickly and gain independence from your finances. Always keep in mind the importance of being proactive, maintaining organization, and formulating a strategy to pay off your debts as quickly as is humanly possible.


About Samuel 637 Articles
Samuel is an SEO technician and Content developer with over 5 years of work experience. He is known for his love and passion for helping others achieve their financial goals and dreams. This lead to the birth of Finwealthonline. His love for many has to lead him to help thousands of students seeking financial loan advices, app reviews with the right information. Samuel being the CEO and founder of Finwealthonline will continue his good work on helping people with the right information that will lead to achieving their financial dreams and goals.

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