What to do about card debt when on a fixed income

To Her Credit columnist Sally Herigstad
Sally Herigstad is a certified public accountant and the author of "Help! I Can't Pay My Bills: Surviving a Financial Crisis" (St. Martin's Press, 2006). She writes "To Her Credit," a weekly reader Q&A column about issues involving women, credit and debt, for CreditCards.com, and also wrote for MSN Money, Interest.com and Bankrate.com, and has guested on Martha Stewart Radio and other programs.

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Question Dear Sally,
I am in dire need of advice on how can I pay my credit card bills down. I’m on disability benefits, and I receive $1,200 once a month. I also have a mortgage and other things.

I also have three credit cards, altogether totaling about $1,000. I'm trying to rebuild my credit and pay down debt, but sometimes things come up, and I have no choice but to put it on a credit card because I have no money. I just need someone to help me get on the right track. – Carrie


Dear Carrie,
Your basic problem is lack of money, not your current credit card balances. If your credit card balances magically disappeared tomorrow, they would be back before you had a chance to celebrate because you have absolutely no wiggle room in your budget and apparently no emergency fund.

For people on disability benefits, this is an especially difficult situation. Disability benefits pay just the bare minimum for a person to live on, and there’s usually nothing extra to pay for unexpected expenses or to pay down debt. I’m not going to suggest you can cut a lot from your budget, because I doubt you have any extra to cut.

Depending on the type and permanence of your disability, I might suggest you find a way to increase your income. I have known people on disability who were able to work a few hours a week, without jeopardizing their disability status or their health. You may be able to find something related to your former line of work, but lower stress. When you are living on $1,200 per month, even a few hundred dollars per month would make a huge difference.

Another option is to start a very small, low-risk business. It could be as simple as buying and selling a few items online or offering a service.

If you have a mortgage, you must have a house. Perhaps you could share your space with someone who could help by paying you rent and sharing utility expenses. Or you could move in with a relative, even on a temporary basis, so you can rent out your house and receive income.

Unless you find a way to increase your monthly income, your choices are very limited. If you fall behind on your minimum payments, the credit card companies cannot take your disability benefits. However, they can raise your interest rates and tack on extra fees. When you need a little more credit to pay for those expenses that come up, you either won’t be able to use your credit, or it will cost you more to do so. That only makes it easier to get deeper in debt every year, until a person looks back and wonders how they could possibly have gotten into so much trouble.

If you would like someone to sit down with you and look at your total financial picture, you may consider trying credit counseling. I recommend finding a nonprofit agency affiliated with the National Foundation for Credit Counseling or the Financial Counseling Association of America. Seeking help now, before you get deeper in debt, can help you get back on track and stay on track for good.

See related: Over your head in debt? 5 extreme budgeting ideas, Disabled and in debt: Three choices

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Updated: 01-19-2018