How I Cleared My Outstanding Bills With Limited Income


Today we have another guest post written by Good Nelly.  Instead of writing another post about how the choices we make impact our financial future, she decide to tell her story of how she eliminated her outstanding bills with limited income.  Take it away, Nelly!


Looking at a personal finance adviser, you always think that this person’s financial life has been a wonderful one. But, it’s always not right; at least not in my case.

Once I had to struggle to repay my outstanding debts. Perhaps that experience helped me to take more interest in personal financial matters, and become a personal financial adviser.

So, here’s my story, especially for those, who are struggling to get out of debt.


First, let me share a bit how I welcomed debt in my life.


Irresponsible usage of credit cards

Like many others, I also used credit cards but didn’t clear the outstanding balance at every billing cycle. So, quite naturally, soon I incurred quite a good amount of debt.

Not that I didn’t make any payment, but more often made only the minimum payments.


My job didn’t help to earn much

I had a job but that paid only a meager amount, as I was doing an hourly based job. I was looking for a good job and appeared for some interviews as well.


When I was experiencing the debt problems, one day, I got a call from a collection agency. That day, I promised myself that I would solve my debt problems anyhow.


So, here’s what I did.


Made an attempt to plan a budget

I knew that planning a budget is the basic step, but didn’t take out time to plan one. The next day after getting a call from the debt collector, I sat down to plan a budget.

I wasn’t successful in the first attempt. I really had to struggle to reduce my spending to save a decent amount to repay debts.


Figured out where I stood financially

Unless you acknowledge what debts you have, you won’t be able to clear them out. You need to have a clear picture and figure out which debt to tackle first.

So, sit with a pen and paper or open a spreadsheet and list your debts with the creditor’s name, the rate of interest, outstanding amount, how many days you’ve been delinquent, and any other details if required.

I figured out that I had:

Credit card A with $9,000 @ 10% interest

Credit card B with $ 12,000 @ 12% interest

Credit card C with $15,000 @ 14% interest

So, all total the outstanding debt amount was $36,000. The minimum payment per month in total was about $610.


Took help of a bill consolidation company

At first, I thought that I would use the debt avalanche method and target the highest interest rate debt first. But, I wasn’t sure whether or not I would be able to do it on my own.

My parents offered to repay some of my debts, but I refused. It was my debt, so, I wanted to take the full responsibility and clear my debts all by myself.

Then, my parents advised me to take help of bill consolidation companies since they offer complete guidance to pay back debts. I agreed to that. I researched and found a good consolidation company, who reviewed my financial situation and asked to pay them a monthly amount. The consultant negotiated with the creditors and everything else was taken care by them.

It took about 2 and ½ years to repay my credit card bills in full. It also helped me to increase my credit score.


The hurdles I experienced in my journey

It wasn’t so easy to save the amount every month so that I could make the payment to the consolidation company. No matter how much I tried, I couldn’t follow the budget and save the required amount.

But, the consultant from the consolidation company helped me to plan a suitable budget, which I could follow.


I took up a freelancing job

I took up a freelancing job but it didn’t pay me much. However, every cent counts in debt free journey. So, I started saving the entire money I got from my freelancing job. In addition to that, I also opted for some part-time jobs when I got opportunities.

And I used that amount only to repay my outstanding bills.


What decisions I took to save more

To clear my debt with my limited income, some lifestyle changes were necessary. There was no other way out.

So, these are the changes I made:

I shared my apartment with a roommate – Instead of moving to a different apartment, I decided to share with a roommate. So, I shared my apartment with Claire. I didn’t have much difficulty since we had two different bedrooms.

I canceled my gym membership – I started loving nature and went on hiking trails instead of visiting the gym. I will strongly recommend this. It will help you save a significant amount and you’ll also start enjoying your trails. You know what? I have fallen in love with these trails.

I stopped eating out except on special occasions – This is a thing I feel good about even now when I think about it. It also helped me shed extra weight since I shifted to healthy eating.

I stopped meeting friends at shopping malls – When you visit a shopping mall, you get enticed to buy something. So, when you want to save money, don’t visit the shopping malls and even grocery stores, when you don’t need it. And when you go there, do have a list of the things to purchase. Yes, even when you go to the shopping malls.


If I can deal with my debts and clear them off, any one of you can do it. You don’t need to have good financial knowledge to repay your debts.

But, if you sign up with a consolidation company, make sure you take help from a reputed one, who has a successful clientele. It should also have a good BBB rating. Doing so, you can rely on them completely.


So, get going! Become debt free!

[Editor’s note:  Using a debt consolidation company to help you eliminate your credit card debt is one way to go about things.  I chose to refinance my loans by taking out a few personal loans and a zero interest credit card.  As always, do your own research!]

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Author: Jerry

Jerry is a Business Insider Contributing Writer who is obsessed with personal finance. He believes you can improve your financial situation by applying principles taught by the financial independence community to your financial life.

If you are having trouble saving, he recommends that you join the SaverLife Savings program where you can get a $60 reward after six months (no income requirement). All you have to do is put a minimum of $20 a month into a savings account. Easy, right?

For a fun read, check out his article 10 Signs You’re a Personal Finance Addict to see if you are a personal finance nerd.

Before you go, check out the new From Broke to Financially Woke Interview Series.

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