Getting out of Debt on a Low Income {Budget Update}

Debt Reduction Series

I know it’s been a while since my last update.  That’s because there really hasn’t been much to report, nothing good anyway. However, as of today, we DO have some good news,  and I’ve received a couple of inquiries, so I thought I would give you all an update.

Before I get started with our particular update, I want to note that there are a few characteristics that are pretty necessary if you are going to get out of debt on a low income. Number one is patience. The Dave Ramsey stories you hear about people paying off $85,000 in debt in 6 months…well, that just isn’t mathematically possible on a $36,000/year income. It just isn’t. So for us, we had to recognize that it’s going to take us more time and patience. That’s okay. The important thing is that we are moving in the right direction.

Secondly, you have to realize that no matter how things look on paper, you are likely to experience setbacks. Cars break down. We may have unexpected doctor bills, unexpected expenses. You might move across the state and have a house you can’t sell or rent that you’re still making mortgage payments on.

Okay, that last one might be a little less common, but it’s what happened to us. We tightened our budget and made our get-out-of-debt plan. But then everything changed as we moved across the state and had to find another $440/month in our budget as we had to continue paying that mortgage on top of our living expenses here.  Let me tell you, that is a bare bones budget for a family that was already on a pretty tight budget to begin with!

Student Loan Debt

In my last update, I shared that we’d found renters. Unfortunately that did not work out as a long term solution. The house was rented for 5 months, so that income did help us to continue chipping away at my student loan and as of TODAY, we sent away the last payment of my second student loan!!!

This means that on our bare bones budget, we have paid off nearly $20,000 in student loan debt in a little less than 2 years!!! 

This is a great milestone for us, and a very exciting moment. We even splurged on Italian last night to celebrate :)


We are still whittling away at the remaining $56,200 that we owe on our house mortgage. We’ve tried renting it, which isn’t ideal. We’ve also tried selling it. In the 7 years we’ve owned the property, we have had it on the market for 7-8 periods with 4 different realtors. (do the math–most of the time we’ve had the place, it has been on the market!). We’ve also tried to do an auction this past weekend, setting the reserve below what we needed to break even, and we were going to use our savings to make up the difference.

Nothing has been successful. Finally, the latest agent said that she feels the house is basically “unsellable” because of the difficulty to obtain financing right now (it’s a double-wide), and a few other factors. She recommended that we contact our lender again and see if they could offer us any options. I had called before and was told basically that if we were up to date on our payments, they would not do anything for us. I was also told that since we aren’t living there, they couldn’t do anything for us.

I called this week and the woman I spoke with was very helpful. She feels like our good payment history and circumstances (job transfer 250 miles away) would probably allow us to be approved for either a short sale or deed-in-lieu. This hasn’t been our first option, because we want to feel like we’re doing the honorable thing by our lender. However, if they allow us to get out of it and mark the debt “paid-in-full” which they can do if they choose, then this is an option for us.  The woman I spoke with actually said we should have called them from the very beginning. Which I did, but apparently didn’t talk to the right person.

So if things go as planned, and we are approved to proceed with a short sale and/or deed-in-lieu, then we could potentially be debt-free within 6 months or so. At that time, we can start saving more fully for the small place in the country that our family so desires.

At any rate, we’re taking baby steps, but in the right direction.

I can’t end it without saying this. God Provides.  Every step of the way, God has provided for our needs to be met. He deserves all the glory.


  1. Katie R says

    I just paid off a 10,900 bill saving us 4100 in interest. It was from my side “emergency” fund so now we have nothing but faith that things won’t fall apart and no savings to our names but it was the right thing sadly as for the last 2 years the extra 288 coming out of our almost non existent income has made day to day living almost impossible. We have his car still we have to consider as an everyday expense, the ability to pay off the last of our cc debit in 2 months and then it’s just the house which being underwater with everything else in this area we can’t refi but we’re doing what we can. A word of warning on the short sale though. We had to do that when the market crashed in 08 and we had to move across state for work. The house was sold but our credit took such a hit even now we are still trying to recover it years later. If you are looking to eventually buy elsewhere I’m not sure how long you plan on waiting to do that but we’ve had to take higher interest payments and can’t really get loans even if needed without paying the penalties. It crushed me when this happened as I’ve always had perfect credit, no cc debit and paid for everything in cash basically but with no other option I was sunk. I’m not sure how this person made it sound to you and maybe they have a different program that won’t destroy your credit either but it rendered mine worthless.

    • Crystal Brothers says

      Katie, I’m very sorry about your house situation and credit. That is definitely a possibility for us as well. However, our overall goal is to not get back in debt at all, although that’s certainly difficult to do these days. Basically it’s up to the lender whether it is bad for your credit or not. They have the ability to mark the debt paid in full if they choose. My real estate agent recommended that we go through a lawyer to negotiate those things for us. I’m sure it also depends on how much of a loss they take, etc. We’ve been trying to sell our place since the market crash in 08 as well.

      I’m so glad to hear that you were able to pay off a $10,900 bill! That’s awesome. I’m very impressed that you were able to have such a great emergency fund! It’s hard to save up that kind of money.

  2. says

    Crystal, What a blessing to send in that last payment. Congratulations! That is wonderful……. I’m sorry you are having so many problems w/ selling….that is so hard, but thank you for your attitude and trust in the Lord. I have found that God teaches us so many things through financial difficulties where we have to trust only in the Lord. (Ouch, isn’t that what we are supposed to do anyway?! :) I guess when things truly are beyond us, we realize we HAVE to rely on Him…………

    We recently found out that we unexpectedly need a new furnace and air conditioner…..and it is NOT in the budget. We know that God isn’t taken by surprise ….but we are. The refund check we were counting on for paying more of the mortgage, will now be used for this more urgent need, but it still isn’t nearly enough. I am selling some extra things on Craigslist and planning a garage sale and hope to surprise my husband with some of the money we need for this….Thankfully, we have a few weeks to deal with this.However it works, I know God will provide….He always does. Thank you for being such a good example in this….May God bless your frugality (is that a word? :) and your trust in Him.

    • Crystal Brothers says

      Thanks so much for your encouragement! I need to work harder at selling things. I never seem to have much luck with it like other people talk about, so I don’t do it as much as I should. I used to get frustrated when unexpected things would come up like that right when we had some extra money. Since extra money is a rare thing around here we always have plans for it. But, the Lord revealed to me that it’s not extra money at all–it’s His provision coming just in time to help us with that unexpected expense. I will be praying for the Lord to continue to provide for you in this particular expense. I know that is a big one and could be discouraging, but it sounds like you have a great attitude about it. Thanks for sharing :)

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