How Do You Pay Off Debt On Low Salary

Many people ask me how I pay off so much debt on such a low salary. Sometimes it baffles me too, but I figure that I would share some numbers with you, to help illuminate how I can do it.

I don’t talk about budgets that often here and there is a reason. I don’t love budgets. Budgets may be sexy, but sometimes they are hard to commit to and feel restricting.

I prefer to have a “spending plan” as other bloggers have called it, which focuses on my main goal of putting money towards my emergency fund and debt, while living on a minimal salary.

Here are my main expenses each month:

$450 for rent and utilities (my half — electricity, internet, gas, (water is included in rent)– could increase to $500 in winter)

$218 for health insurance

$300 for groceries and restaurants (it’s been higher at points too — my bad area. I consider eating out my entertainment)

$0 – $30 Transportation (only if I need to take the bus somewhere because it’s gross out — but I tend to bike or walk everywhere)

That’s it. For full disclosure, my mom pays for my phone. I’ve tried for years to pay, but since we are on a family plan, they insist I am saving them money by being on their plan. I also have the cheapest, most basic Samsung around and don’t really use data — because hello, I’m at home most of the time! I am sure this will change at some point soon.

I thought I’d share that because I believe in transparency — I always find it annoying when I read someone who pays $4,000 per month to debt and only later do you find out they live at home with their parents, or are making $100,000 per year. It’s important to look at the context of the situation.  We all have our own financial privileges, which need to be taken into consideration.

I don’t buy clothes or cosmetics. I don’t have a gym membership or a car. I don’t really buy gifts. I don’t have kids or pets. My expenses are pretty minimal, which is how I can pay off debt on a low salary. This is how I’ve been able to pay off over $30,000 in debt in 3+ years, making that amount of money, or much less.

Let’s say that after taxes I make $2,000 a month (this of course fluctuates and I’m hoping to make much more soon, but this is a reasonable number to work with).

My basic expenses are about $1,000, leaving me with another $1,000 to put to debt, EF, and savings.

A few years ago, when I first moved to Portland, I brought home $800 a month. How did I do it then? I was on a food stamps and decided to go without health insurance, so then my basic expenses were around $500. I also side hustled a lot to help that number.

A few months later, I got a “better” paying temp job making $12/hr. I was bringing home $1320 a month. I was now ineligible for food stamps, but still went without insurance.

During both of these times when I was low-income, I was able to pay off debt because:

Hopefully that gives you some context on how I’m able to do it. Now that I’m freelance, I won’t touch my savings. So now, my main priority is to make more money, which I have been doing month after month since being freelance. In the next year, I want to double my income. I know that is ambitious, but I can will do it.

It’s important to note that this is “my half” of the budget. My partner and I do not have joint finances. I just included my basics at the top, because those don’t change. With what is left over, I put nearly everything to debt and some to savings.

My spending plan helps me reach my goals — living on less, so I can put as much as possible to my debt.

Let me know if you have any questions — I don’t think I missed anything. But feel free to ask away!

p.s. If you want to hear about me being on food stamps, walking invisible dogs, side hustling, and fake laughs, then check out my girl Shannon’s podcast.


Melanie is a freelance writer currently living in Portland, Oregon. She is passionate about education, financial literacy, and empowering people to take control of their finances. She writes about breaking up with debt, freelancing, and side hustle adventures at

Currently she puts more than 50% of her income towards debt, while living a frugal, fun life. In addition to her love of personal finance, art and music, she is also a karaoke master. Follow the adventure @DearDebtBlog.

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36 responses to “How do you pay off debt on such a low salary?”

  1. Thanks for pulling the curtain back on your finances! I am constantly inspired about your commitment to paying off debt but more importantly living a lifestyle that is sustainable.
    Shannon @ Financially Blonde recently posted…When the Student is ReadyMy Profile

  2. Thanks for the transparency =) It sounds like you’ve made the best decisions for yourself all along. Making more money definitely helps- I think that is an awesome goal!
    Holly@ClubThrifty recently posted…How Much Should You Budget for a Trip to Europe?My Profile

  3. All about keep expenses low no matter what your income. Nicely done Melanie!
    Brian @ Debt Discipline recently posted…Taking ActionMy Profile

  4. I sometimes wonder if I should work harder on dating so that I can get in a relationship to split the cost of rent. lol! Why didn’t I ever think of that! 🙂 I think you’ve made some tremendous sacrifices and it shows how dedicated you are to getting out of debt. I need to work harder at cutting out some more unnecessary spending, but truthfully I’d rather push to earn more. I’m a little tired of cutting, know what I mean?
    Tonya@Budget and the Beach recently posted…I Admit It, Sometimes I Dislike Rich PeopleMy Profile

    • Melanie says:

      File that under unconventional ways to find cheaper rent — it would make an interesting post 😉 I do know what you mean about being tired of cutting things out — which is why I really want to double my income!

  5. I wish my expenses looked so simple! =) But that’s what it’s about – simplifying. Lately I’ve found myself pretty annoyed with having a car, but our city isn’t the most bike friendly (there’s no shoulders on most of the roads). I view eating out as our entertainment as well, since we don’t do much aside from that. I completely agree that living in a low-cost area helps a ton. That’s why we moved! I think it’s totally doable for you to double your income next year!
    Erin @ Journey to Saving recently posted…Being Grateful: Forty-Ninth EditionMy Profile

    • Melanie says:

      Yeah, not having a car is huge for me. Also, as much as I miss NYC, I couldn’t afford to do what I’m doing now there. I really hope I can double my income 🙂 Thanks for the words of encouragement.

  6. Even with 100% of my income going towards my debt, I am nowhere near paying $4000 a month! Boy, would I love to though! 🙂
    Kasey @ Debt Perception recently posted…WagesMy Profile

  7. Morgaine says:

    You’ve done an awesome job at keeping your expenses low while looking for opportunities to increase your income. Keep up the great work! 🙂
    Morgaine recently posted…Pregnancy ShoppingMy Profile

  8. anna says:

    I completely agree it’s all about the context! Each situation may have their pro’s and con’s, but everyone’s situation is so unique that there’s no one plan fits all. Great breakdown, Melanie!
    anna recently posted…Rambly Update – Let the Nesting Commence!My Profile

  9. Wow your expenses are low! That’s great Melanie. I’m so impressed by you. 🙂
    Kayla @ Shoeaholicnomore recently posted…November 2014 Budget PlansMy Profile

  10. Kassandra says:

    It’s sheer will and a lot of hard work that has you being able to get so much accomplished with the current income you have. Hats off to you Melanie and thanks for sharing the deets and giving others who may be in a similar siutation a better perspective.
    Kassandra recently posted…The Truth About My MarriageMy Profile

  11. Alexis says:

    This really hits home for me as a teacher who earns less than $30,000 a year. I pay as much extra on my student loans as I can, but I live in an area with a high cost of living. I pay extra on my student loans every month, but I feel jealous of those who can make more sizable amounts every month.
    Alexis recently posted…September goal updateMy Profile

    • Melanie says:

      That makes me so sad that you are a teacher making less than $30k! Ugh. I miss NYC a lot, but couldn’t do what I’m doing now there. Have you considered moving to a lower cost of living area or tutoring on the side?

  12. Great job keeping your expenses so low. You’ve managed to decrease your debt by a huge amount. What a wonderful accomplishment.
    Jenna @pftwins recently posted…Do I Want To Be A Digital Nomad?My Profile

  13. Sandy says:

    This reminded me about the comment someone made that she couldn’t pay off her debt like “you rich people” to me. Paying down a big debt on a small salary is possible through sacrifice. It’s not what people like to hear, but it’s true.

    I sacrificed a lot of things to pay down my debt and because the ramen noodle gourmet. But that’s a different story.

    What I wanted to say was that although your savings was depleted, it served its purpose – it allowed you to live while you get building your income.

    I’m so happy for you. Truck on!
    Sandy recently posted…Top 5 Reasons Why Baby Boomers Are ScrewedMy Profile

    • Melanie says:

      Thanks so much, Sandy! It IS possible to pay off debt on a small salary. I don’t have a lot of things many people consider normal like a car, house, kids, or pets, etc. You are right, people don’t want to hear that it is possible, because everyone loves to live in excuses. I’ve been there too!

  14. I’m on the same page as you when it comes to making more money. It’s my focus right now and has been the past couple years. This quote was worth repeating: “I always find it annoying when I read someone who pays $4,000 per month to debt and only later do you find out they live at home with their parents, or are making $100,000 per year.” SO TRUE!!!! I can’t stand people who don’t think of finances in terms of context. Finances are completely different for someone who makes $100k versus someone who makes $50k. Likewise, someone who makes $50k with no student debt is TOTALLY different than someone with $50k in income but $75k in student debt. It’s all about context.

    I will try to remember to add this to my weekly roundup next week. Already have the one this week scheduled but I really enjoyed this post!
    DC @ Young Adult Money recently posted…3 Reasons to Consider Relocating for a JobMy Profile

    • Melanie says:

      Context is EVERYTHING! Yet it is often left out of important conversations. I’d be happy if you linked it! Thanks for stopping by and glad you liked it. 🙂

  15. We made the mistake of moving into a place that’s a little bit above what we could afford (plus it’s a crap-hole). It was hard to make ends meet over the summer when I was laid off and my fiance’s hours were cut because our fixed expenses were too much. It’s interesting to see how you do it!
    Amanda @ My Life, I Guess recently posted…A Day in the (Unemployed) LifeMy Profile

    • Melanie says:

      Yeah, that’s tough. When I was younger I immediately lived on my own in a studio apartment in LA. While I could “afford it”, I wish I would have gotten a roommate and paid more towards my loans. Hopefully you guys are doing better now!

  16. Abigail says:

    When I started my blog, we were about $20k in debt between student loans and medical bills. But I was on disability and my husband was on unemployment.

    We managed to get out, despite all sorts of fun unexpected expenses. But yeah some people were surprised how we did it.

    Part of it was that we had a guaranteed weekly income. So we didn’t have to hedge our bets about whether we’d have enough to last two or four weeks.

    Rent wasn’t cheap — about $700 — but we were on low-income phone costs and got help with electricity bills. But my mom would coupon like crazy and come over with food. She also let us use her car for free, eliminating a huge expense. And we stayed home a lot. (I have fatigue issues.)

    It still took us longer than a lot of people because we were bring in about $3,000 a month all told, once I got a $1,000 a month part-time job. But did I mention hubby’s high-risk insurance was $502? Ugh.

    The point is, dedication and smart money moves (which we had like 98% of the time) will win out in the end. Congrats on doing so much on so little.
    Abigail recently posted…Do you know your emergency budget?My Profile

    • Melanie says:

      Wow, that is so inspiring! Sounds like you guys have been through a lot. While it’s difficult to get by on so little, it’s a choice. I have made a lot of choices other people wouldn’t make to get myself out.

  17. Pauline says:

    That is very impressive you manage to keep expenses so low in spite of a crazy high health insurance premium. I am pretty sure in your case I would skip insurance, which of course is not a smart idea but wow, that’s really high!
    Pauline recently posted…Of course the rich want to keep the middle class down!My Profile

  18. An interesting insight but I am somewhat nosey!

    Commuting and rent costs are huge for me in London. I earn the same as my old job but now pay £250. month commuting whereas I use to be able to walk.

    When I could walk to work I also did not bother with data as I would use it at home instead.

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