Almost half of the American population is living paycheck-to-paycheck.

It’s no wonder considering stagnating wages, housing price increases, and a higher cost of living. This is especially troubling (and stressful) for those in debt and trying to close the gap.

How is it possible to reduce or eliminate debt when it all goes to bills and necessary expenses?

1st: Ask Friends & Family

Seeking aid from friends & family is generally not recommended because it can create tension. Yet, this is only the case if a manageable repayment plan had not been established.

Borrowing from a trusted, close family member or friend is a win/win scenario.

· You receive the necessary funds to eliminate debt

· They have an investment that (could) generate income

The money stays within the family & friend circle rather than passed to a third-party. This allows you & them to set fair terms, borrowing limits, and payment schedule.

Approach them as follows:

1. Make a budget plan

2. Talk to them about your needs and plan

3. Put it in writing

4. Communicate

Start with the small debts or those with high-interest rates, pay it back, and repeat the process for the next bill. Work on it one at a time.

2nd: Consider the Alternatives

Family & friends out of the picture? Consider the alternatives:

· Credit Card – Use a free service or official government website to check and review your credit score. Then, compare credit card offers using resources like NerdWallet or CreditKarma. If your credit score is around 600+ (fair) you may be approved for a low-limit credit card.

· Line of Credit Loans – This is a credit card alternative available for those that have employment or regular paychecks. An application is filed, signed, and processed based on minimum income requirements. Upon approval, you may qualify for a $750 credit limit (new customers) and up to $1,250 (returning customers).

· Home Equity Line of Credit – Own a home? A home equity line of credit (HELOC) can provide the necessary funds by leveraging the home (aka. “second mortgage). 85% is the typical amount you can borrow against your home. Wells Fargo, Chase, and Citi Mortgage are rated among the best providers for this alternative.

· Payday Loans – Perhaps hold this as a last resort. These services allow you to get an advance on your paycheck (if you qualify). There are reasonable fees that are paid within the timeframe. Yet, a missed payment can quickly create a negative loop of extra debt.

· Cash Advance Apps – Apps like PayActiv and ActiveHours lets you link a business, verify payroll, and take an advance on future payments or pull money based on the hours clocked within that very same day of usage. Fees are low and repayment plans are flexible.

Of course, there is the obvious…

3rd: Lifestyle Adjustments

Many living paycheck-to-paycheck are in the situation because they live outside their means. They found themselves with new money and began spending more and saving less. It’s time to be humble.

A lesson in frugality will help get back on track:

1. Create a budget

2. Eliminate the unnecessary expenses

3. Renegotiate terms and payments

4. Save (even if it’s a small amount)

Frugality is a mixture of downsizing and logical financial decisions. Eliminating spending “waste” will free the money needed to pay bills. It’s hard scaling back from an enjoyable lifestyle yet it becomes a necessity for the time being.

As the Gap Closes

There’s no doubt it’s difficult to eliminate debt when living paycheck-to-paycheck. Yet, millions of individuals have been successful in retaking control of their personal finances and gaining stability.

You can too.