For some, a combination of strategies may be most effective, like creating a strict budget and using a balance transfer card or debt consolidation loan to accelerate progress. Others may find that a more structured approach, like a debt management program, provides the support and accountability needed to succeed.
While there are no government debt relief grants, there is free money to pay other bills, which should lead to paying off debt because it frees up funds. The biggest grant the government offers may be housing vouchers for those who qualify. The local housing authority pays the landlord directly.
When it comes to credit card debt relief, it's important to dispel a common misconception: There are no government-sponsored programs specifically designed to eliminate credit card debt. So, you should be wary of any offers claiming to represent such government initiatives, as they may be misleading or fraudulent.
The federal government doesn't give hardship grants to individuals. Instead, grants of this nature go to state and local governments, colleges and universities, law enforcement agencies, research labs, nonprofit organizations and businesses.
Those will become part of your budget. The 50-30-20 rule recommends putting 50% of your money toward needs, 30% toward wants, and 20% toward savings. The savings category also includes money you will need to realize your future goals.
Living paycheck to paycheck isn't necessarily bad
For many consumers, NerdWallet found that the paycheck-to-paycheck feeling doesn't mean you are broke; you are just “tightly budgeted.” Let's say you manage to live on a 50-30-20 budget, allocating 50% of your income to needs, 30% to wants and 20% to savings.
Consider the snowball method of paying off debt.
This involves starting with your smallest balance first, paying that off and then rolling that same payment towards the next smallest balance as you work your way up to the largest balance. This method can help you build momentum as each balance is paid off.
Working with a credit counseling agency on a debt management plan. With this option, the counseling agency works with your creditors to lower interest rates, reduce fees and roll your debts into a single, affordable monthly payment. You'll then make one payment to the agency, which distributes it to your creditors.
Debt forgiveness could help with credit cards, back taxes or student loans. But to qualify, you'll typically need to meet certain conditions. This might mean proving financial hardship or making a certain minimum number of payments on your debts. Some forgiveness programs will have stricter criteria than others.
If paying off the debt would drain your savings or compromise your ability to meet basic needs, it may be better to prioritize essential expenses and explore other solutions. For instance, you might negotiate a payment plan or settle the debt for less than the full amount.
Credit card debt forgiveness means resolving your credit card debt for a reduced amount. It's important to understand that complete forgiveness is uncommon. However, credit card companies may be willing to work out a deal if you can't repay the full amount.
While this figure can vary based on factors such as location, family size, and lifestyle preferences, a common range for a good monthly salary is between $6,000 and $8,333 for individuals.
The authors of the analysis define people who live paycheck to paycheck as those who dedicate more than 95% of their household income to necessities, which include gasoline, food, utilities, internet, public transportation, child care and housing costs.
Ideally, you want to have 20% of your take-home pay left over after paying all of your bills. Track spending using an app or spreadsheet to determine why there isn't more money left over after bills. Consider cutting unnecessary bills (like cable, streaming networks, gym memberships) to save money.
The government does not offer "free money" for individuals. Federal grants are typically only for states and organizations. But you may be able to get a federal loan for education, a small business, and more. If you need help with food, health care, or utilities, visit USA.gov's benefits page.
Eligible Hardships:
Severe illness or injury of immediate family member. Death of employee's immediate family member. Major loss/damage to primary residence due to disaster such as fire, flood, hurricane. Victim of domestic violence with immediate need for safe housing.