How to Pay Off Debt on a Fixed Income (Without Feeling Deprived)

Living on a fixed income with a chronic illness can feel like a constant balancing act. You want to pay down debt and build savings, but you also want to enjoy life like everyone else out in the world and sometimes, spending money feels like the only way to add joy to the day.  Am I right?

I get it. I’ve been there and I'm working on paying down my debt too. Today, I want to share some practical tips that can help you pay off debt without falling into the trap of guilt, overspending, or deprivation because until I started using this system, it felt like torture.  I felt like all I did was pay down bills and that's all I was allowed to do until I paid off everything.

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🌱 1. Redefine What a “Win” Looks Like

If you’ve tied your worth to money (like many of us were taught growing up), it’s easy to feel discouraged when you can’t earn more or when your spending habits don’t match your goals, whatever they may be.

So here's what we're going to do to change some of that.  You're going to find WINS in your life.  A win isn’t just earning more money. A win can be so much more. Let's take a look at a few wins...

• Paying a bill on time
• Adding $5 to savings
• Saying “no” to an impulse purchase
• Finding joy in a free or low-cost activity or hobby

👉 Track those wins. They matter more than you think, and over time, they add up.  I share my wins from time to time on my socials so check out some of what I'm doing when you have a moment.

💸 2. Create a “Freedom Fund”

Instead of cutting out all of your spending, set aside a little each month just for guilt-free fun when you're ready and able.  Call it your Freedom Fund. Even $20 makes a difference.  Check with your local banks, investment firms or websites like public or paypal which offer high yield savings accounts that help you earn some interest while you're saving money.

When you spend from this fund, it’s a choice, not sabotage because you've already given yourself permission to use this "fun money" on anything you want. It keeps you from falling into the “all-or-nothing” spending cycle that often leads to guilt or overspending.  It helps you plan for fun things, which you totally deserve!

📊 3. Use a Tracker to Build Self-Trust

Most of us who struggle with money don’t actually have a money problem but instead we have a self-trust problem.  I've done a lot of shadow work on this myself and the reason for which I accumulated my debt. I highly encourage you to do the same. 

Some of the reasons that I was in debt was because there was no other option (or very few options).  I've run into a lot of instances where my insurance didn't pay for some or all of my treatments, exams or tests or I had unexpected surgeries that we're not entirely covered.  Other times, it came from old habits when I had more money, needed a dopamine hit or because of boundary issues that I had.  (That's a whole different kind of blog post for another day...keep an eye out as I may go more into that at a later date.)

So what I decided to do was start tracking my money in a simple notebook and how I spent it so that I could see where every cent went and start to cut back on things that I really didn't need to be spending money on.  Once I had that info, I could start a plan on paying my debt down with one of the many debt pay down methods that are out there.

Next, I decided that I just needed something simple that would allow me to see my progress and spending habits wins.  My printable tracker has on it the following things...

✔ Bills paid
✔ Savings added
✔ No overspending today
✔ Tried something new for fun

I aim to get a check mark as often as I can and when applicable.  Every checkmark you add to your tracker is proof that you’re building self-trust, learning new habits and moving forward and to me that meant that I was making progress and headed in the right direction.

🔁 4. Replace Habits, Don’t Just Cut Them

If you’re used to spending for excitement, relief, or boredom, simply “stopping” won’t work. You have to replace the habit instead.  That's what I had to do and what has worked for me.  I had to figure out new ways of finding enjoyment instead of just spending money.

Some ideas you may want to try when the urge hits to shop, gamble or whatever it is that's adding to your debt:

• Watch a funny video
• Play a puzzle or non-money game
• Try a new snack or drink
• Declutter a drawer
• Step outside for fresh air
• Text a friend
• Walk your dog

Each time you replace the urge with something new, you retrain your brain and over time, the spending urge weakens because you're replacing those old habits with new ones.

🌍 5. Focus on What You Can Control

Because you're on a fixed income, you may not be able to just “earn more" but you can control things like:

• How you spend what you have
• How you track your wins
• How you find joy without debt
• How you can look for additional savings on things you're already buying and using that are necessities

and more.

This shift from “I don’t have enough” to “I can work with what I have” changes everything.  Remember that, my friend.

✨ Final Thought

Paying off debt on a fixed income isn’t about perfection. It’s about building self-trust, one small win at a time. You deserve freedom, joy, and peace with money and it’s possible without giving up the things that make life worth living.  I'm proof that you can use these tips and overtime, you'll work to pay your debt down.  It does take hard work.  I'm not gonna lie but it can be done.

📊 Free Tools: Weekly Wins Money Tracker and Affirmation Image

Here’s a Weekly Wins Money Tracker you can copy or download to build momentum and track your progress while building your self trust back up.  It's my gift to you as well as this affirmation image.  Use the tracker each day and then download and save the affirmation image as often as you need so that you improve your money mindset.

✨ Reframe this for yourself by using this affirmation:
“Every day I keep money, I’m paying myself back with freedom. Debt payoff is not punishment, it’s buying back my peace.”

In this together,

Laura

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