It’s a vicious cycle that affects nearly 8 out of 10  U.S. workers each month.

It’s an insidious phenomenon that cuts across varying income levels. It often leaves its sufferers strapped for cash, teetering on the edge of financial collapse, terrified of what may happen if an unexpected expense comes up. 

What is this horror I’m speaking of? 

It’s called living paycheck to paycheck.  

Living paycheck to paycheck is an expression used to describe a financial situation in which an individual uses most or all of their monthly income to cover their monthly expenses – with no money left over, no money in savings, and barely any money left to pay off debt.

It can be a frightening way to live, always fearing the next emergency will send you into a financial catastrophe. 

Not only is this incredibly stressful, but it puts you at risk for serious financial trouble if you end up needing money for something outside of your everyday budget. Let’s say your car breaks down, or your spouse needs emergency dental work. 

What then? 

It can be truly overwhelming trying to simply pay off normal expenses such as food, housing, and transportation each month. So how do you pay off debt when living paycheck to paycheck?

Keep reading to discover the top 5 ways to pay off debt when living paycheck to paycheck!

1. Focus on Your Mindset

It might seem impossible to do anything but barely scrape by each month when living paycheck to paycheck. But half the battle is believing you can get out of debt and that it is possible!

It is so important to fearlessly believe that you can succeed. Hundreds of thousands, if not millions of people have made it out of debt before you! You are not the first to do it and you certainly will not be the last to make the journey! It IS possible.

It just takes some faith to believe it can be done, along with a little determination and some elbow grease to get down to work. 

2. Create an Emergency Fund

While you may be eager to jump right in and start tackling your debt, if you don’t have an emergency fund, this should be your first goal. 

The reason for having an emergency fund is because without an emergency fund or financial buffer of some sort, any unexpected costs can derail your debt repayment process.

 What happens if your car breaks down or you become laid off unexpectedly? 

Whatever happens, when emergencies arise, money is needed – and fast. 

Having a small emergency fund will help you avoid going further into debt when emergencies arise. Having even $300 – $500 saved up is better than nothing. 

Even that amount can help you out in a stressful financial situation. 

At the time of this writing, my husband was involved in a car accident where he was rear ended four days ago. Instead of stressing over the deductible and the car rental, we were able to easily pay the expenses by using our emergency fund. 

Here at DuoDollars, we recommend a baby emergency fund of one month’s expenses to start. Once you can, grow the fund to 3 – 6 month’s worth of expenses. 

 If that seems unattainable, start by putting away $20 dollars here, $50 dollars there, until you start to accumulate several hundred into your account. 

Keep adding whatever you can and make sure you don’t touch the money unless it is truly an emergency. Over time, you will see your balance grow (and your peace of mind as well!) 

So, start an emergency fund now with a separate savings account. 

Make sure it is one that is out of sight and out of mind, so you are not tempted to use it for daily expenses. Also make sure that it is in an easily accessible account, so that when an emergency does arise, you can access the money fast. 

3. Examine Your Expenses & Cut Them Mercilessly

Track each and every single expense for a month to see where all your money is going. Go over everything with a fine tooth comb. Don’t leave anything out. Even a couple dollars spent here and there can add up quickly. 

The easiest way to do this is with a personal finance tool such as It automatically categorizes your spending into different sections making it easy to determine exactly where your money is going to. 

If you are able to, spend a few hours reviewing your bank account(s) for the past couple of months so that you can have a good understanding of where your money is going each month, as monthly expenses tend to vary slightly from month to month.

Once you have determined where your money is going, cut expenses with abandon.

Here are the two main ways you can dominate cutting expenses. 

A) The first option is to remove as many small and non-essential expenses as possible from your budget.

For example, remove Netflix, Hulu, daily lattes from Starbucks, etc. until you have freed up some extra money. Anything you can cut and save can now go towards paying off your debt. 

I will say – this method tends to cut out the small pleasures in life, and is not our recommended method of cutting expenses. We prefer the next method much more.

B) The second method is to focus on the largest expenses in your budget such as housing and transportation costs each month.

For reducing housing costs, this could entail getting a roommate, house hacking, renting out an extra room on AirBnB, or even considering moving to a less expensive apartment or home. 

For reducing transportation costs, this could include carpooling, cycling to work, or even trading in your vehicle for a less expensive one. 

Each method has their pros and cons, but ultimately, the more money you are able to save and put towards debt, the faster you will get out of it. 

If you are able to combine both methods to reduce your expenses, you will be on the fast track to paying off your debt and breaking the cycle of living paycheck to paycheck!

4. Look For Ways To Earn Extra Income

When it comes down to it, the best way to pay off debt when living paycheck to paycheck is to either cut expenses and use the extra money to pay towards debt, or to increase the amount of income coming into the household and use the extra money to pay towards debt. 

The most ideal situation would be to do both! 

In today’s day and age, there are countless ways to earn extra income in addition to your 9 to 5. 

Here are a few ways you could earn extra income:

  • Walk Your Neighbors’ Dogs with
  • Babysit on the Weekends 
  • Mow Lawns
  • Drive for Uber or Lyft 
  • Start a blog 
  • Sell Your Extra Stuff Online 
  • Pick up Part-Time or Seasonal Work

These are just a few examples to get you started. For a more comprehensive list, simply Google something along the lines of “Easy Side Hustles” or “How To Make Money From Home.” 

5. Evaluate Your Progress and Never Give Up!

Keep chipping away at your debt by cutting expenses and earning as much money as you can while putting it towards your debt. 

To stay motivated, keep a log of how much debt you’ve paid off so that you can see those numbers continue to reduce.

Don’t give up.

 Do your best to keep earning extra cash here and there and then use it to pay off your debt with the money you earn. 

Before you know it, your minimum payments will start to reduce and you’ll be able to pay off even more or use the extra money to go towards your savings account. 

It won’t be easy, but it’ll be worth it. Over time, it is possible to break free of the cycle of living paycheck to paycheck and pay off your debt.

In conclusion, the 5 steps to paying off debt while living paycheck to paycheck are the following:

1. Focus On Your Mindset

2. Create an Emergency Fund

3. Examine Your Expenses & Cut Them Mercilessly

4. Look For Ways to Earn Extra Income

5. Evaluate Your Progress and Never Give Up! 

It can seem impossible to get out of debt while living paycheck to paycheck, but it IS possible! Begin to implement these tips today and get started on your journey to paying off your debt!