10 Ways Real People Save More and Pay Off Debt — On Less Than $45,000 Per Year

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Student Loan Hero Advertiser Disclosure

Our team at Student Loan Hero works hard to find and recommend products and services that we believe are of high quality. We sometimes earn a sales commission or advertising fee when recommending various products and services to you. Similar to when you are being sold any product or service, be sure to read the fine print to help you understand what you are buying. Be sure to consult with a licensed professional if you have any concerns. Student Loan Hero is not a lender or investment advisor. We are not involved in the loan approval or investment process, nor do we make credit or investment related decisions. The rates and terms listed on our website are estimates and are subject to change at any time.

Editorial Note: This content is not provided or commissioned by any financial institution. Any opinions, analyses, reviews or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by the financial institution.

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You reach the end of another financial success story and find out the victor’s “secret to success” isn’t really a secret — it’s a six-figure salary, a handout from well-off parents, or some other stroke of luck.

“Who are these people?” you wonder. They don’t look like you or anyone you know, and they usually earn way more than the average U.S. salary of $44,668, according to the Bureau of Labor Statistics.

To find the road map to financial success without a six-figure income, I talked to four average earners who are well on their way. Find out how they are saving money and paying off debt.

1. Learn to love the lean lifestyle

All the average earners I spoke to share an important trait: a frugal streak with an unwillingness to pay for things they don’t need or value.

Amber Westover is a debt expert for review website Best Company. Before landing her current job, however, she worked as a teacher for five years. She saved $25,000 during that time despite earning an annual salary of just $38,000 at its highest.

Westover credits her lean lifestyle to smart saving habits, including:

  • Distinguishing between wants and needs. “Before buying anything, I ask, ‘Do I really need this?’” Westover said.
  • Finding ways to pay less. “Movie theaters in my area have discounts on Tuesdays,” Westover continued. “I look for these and other similar deals to help save money.”
  • Knowing when to do without. “I bring lunch to work rather than eating out,” said Westover.

2. Focus on the ‘why’ behind your frugality

Katherine Pomerantz, founder of The Bookkeeping Artist, offers money mentorship for creative entrepreneurs. She and her husband, a Ph.D. student, gross around $38,000 per year and manage to save $400 to $600 per month.

Pomerantz credits their significant savings to a frugal way of life.

“We simply don’t have a lot of the material things married couples usually have,” Pomerantz said. “We share a beat-up old car and still trip over each other in a cramped one-bedroom apartment.”

This lifestyle comes with inconveniences, but Pomerantz uses those small frustrations to maintain momentum toward her money goals.

“That cramped apartment is great motivation to save up for a house,” Pomerantz explained. “Wanting a flashy car is great motivation to work harder in my business. Living below our means forces us to confront our financial situation in a very real way because the ‘pain’ never quite goes away.”

3. Make a plan for your money

Angalena Malavenda is an online PR specialist for digital agency Web Talent Marketing. She carefully sets and follows a budget to make the most of her $35,000 annual salary.

Malavenda calculates limits on different spending categories in a spreadsheet and tracks all her expenses with the help of Mint. “By doing so, I can see what money is going out in each category,” she said.

This process helped her keep her spending on track with her goals and free up $850 per month. She used those leftover funds to pay off a $6,000 car loan in just seven months.

4. Work backward to budget for big goals

In addition to tracking expenses, your budget should allocate funds for your financial goals. To figure out how much she needs to set aside for financial goals, Pomerantz works backward.

“My husband and I talked about our long-term goals, calculated how much we needed to save every month, and worked backward to budget our expenses,” Pomerantz explained.

Here are some steps you can use to do the same:

  1. Identify your goals in terms of both dollars and time. For instance, you might want to build a $3,000 emergency fund over six months or pay off $5,000 in credit card debt in a year.
  2. Calculate the monthly amount needed to reach that goal. For instance, you’d have a $3,000 emergency fund after saving $500 per month for six months. Paying off a $5,000 credit card balance in a year would require payments of around $417 per month.
  3. Set aside money for your goal in your budget. Then follow through with transferring that amount into savings or sending in an extra payment each month.
  4. Roll with the punches. “We made some adjustments to ensure we could live in reasonable comfort,” Pomerantz said. “This system works surprisingly well.”

5. Paycheck in, savings out

“Setting aside savings first” is Westover’s secret to financial success. The first thing she does when she receives a paycheck is transfer what she wants to save into a separate savings account.

Westover also adopted the mindset that what she saves is off limits.

“Once money enters my savings account, I never touch it unless I reach my designated goal,” Westover explained. She recently used $13,500 from her savings to purchase a car in cash.

6. Always know how much is safe to spend

When you’re following a budget with little wiggle room, you need to constantly check in on your spending and account balances. Westover pays all her bills and transfers money into savings as soon as she can so she knows what’s safe to spend at any point in the month.

“Once all of my savings funds are withdrawn from my checking account, the rest is free game,” Westover said. She then has the flexibility to spend as she wants without having to track each dollar closely.

“I like to keep around $100-200 in the account,” Westover said. Once she reaches that amount, she stops spending until her next paycheck comes in.

Find a similar spending system that allows you to easily keep tabs on your current balance, recent purchases, and upcoming costs.

Checking accounts often allow you to set text or email alerts that automatically notify you if your balance dips too low or when you have a bill due.

7. Build and maintain an emergency fund

When you’re earning an average wage, you can’t afford everyday financial setbacks. That’s why it’s vital for you to create an emergency fund.

Pomerantz has always kept some savings on hand. Recently, she fully funded her emergency fund with several months’ worth of income.

“By growing our cash assets, we’ve never been cash poor and we’ve been able to pull through some tough situations without resorting to a credit card,” Pomerantz said.

For instance, Pomerantz recently adopted a dog who needed an expensive medical procedure. “The shelter offered to take her back and help her pass peacefully — but, no, my husband and I had enough cash to cover her bills,” Pomerantz said. And the dog is now doing great.

8. Avoid debt — you can’t afford it

Avoiding debt is another guiding principle that helped these average earners work toward financial success.

“If you have an average or even a below-average income, I think people should focus more on preventing debt rather than paying it off,” Pomerantz said.

In particular, you have to be careful with high-interest credit card debt. Westover spends with credit cards but uses a healthy dose of caution and care.

“I regularly check my credit card balance,” Westover said. And she sticks to this rule: “My credit card balance can never exceed the amount of money I have left in my checking account.”

Westover pays her credit cards off in full each month, often before the due dates, which ensures she never pays credit card interest or gets into debt.

9. Take a balanced approach to paying off debt

For average earners who have some extra money to play with each month, it might seem like paying down debt is the obvious answer.

However, saving or investing extra funds could be a smarter move. Here are some general rules for deciding whether to pay off debt or save:

  • Pay down expensive debt first. Credit cards and some personal loans have APRs of 10% to 20% or higher. Paying extra on expensive debt is an important way to save on interest and get ahead.
  • Consider saving for retirement before you’re completely out of debt. Tax benefits, employer matching, and decent return rates all help your money go further when it’s invested in a retirement account.
  • Save for future purchases, especially if it’s a cost you’d otherwise have to put on a credit card and pay high interest on.
  • Explore debt repayment strategies such as refinancing or debt consolidation. You could lower your interest rate, pay less each month, or both.

10. Focus on growing your income

Lastly, keep in mind that your paychecks aren’t the ceiling on your earnings. You can work a side hustle to make more money now and focus on working toward higher pay in the future.

John Rehm, a digital PR coordinator at 2U, said a second job has helped him get ahead in high-cost Washington, D.C. He picked up a shift every weekend at REI to supplement the $41,000 he earned when he moved to D.C.

“The extra money pays for parking [for] a month or going-out expenses,” Rehm said. “Plus I get great discounts to fuel my love for the outdoors.”

Malavenda also works a side gig as a referee. She puts this extra income to work, making double payments on her car loan and adding any leftover funds to her savings account.

If you take some time to explore side hustle ideas, you could find a new way to add to your income. You also can work toward a raise or look for new job opportunities that could boost your pay.

Although Rehm earned just $41,000 when he moved to D.C, he has since grown his income to $55,000 per year.

You might not be an average earner forever. But even if you are, these real people are proof that it doesn’t take a six-figure income to save and pay off debt. The tips above can be your starting point to grow your net worth and find financial success, whatever your income.

Interested in refinancing student loans?

Here are the top 8 lenders of 2020!
LenderVariable APREligible Degrees 
Check out the testimonials and our in-depth reviews!
1 Important Disclosures for Earnest.

Earnest Disclosures

To qualify, you must be a U.S. citizen or possess a 10-year (non-conditional) Permanent Resident Card, reside in a state Earnest lends in, and satisfy our minimum eligibility criteria. You may find more information on loan eligibility here: https://www.earnest.com/eligibility. Not all applicants will be approved for a loan, and not all applicants will qualify for the lowest rate. Approval and interest rate depend on the review of a complete application.

Earnest fixed rate loan rates range from 3.20% APR (with Auto Pay) to 6.99% APR (with Auto Pay). Variable rate loan rates range from 1.99% APR (with Auto Pay) to 6.89% APR (with Auto Pay). For variable rate loans, although the interest rate will vary after you are approved, the interest rate will never exceed 8.95% for loan terms 10 years or less. For loan terms of 10 years to 15 years, the interest rate will never exceed 9.95%. For loan terms over 15 years, the interest rate will never exceed 11.95% (the maximum rates for these loans). Earnest variable interest rate loans are based on a publicly available index, the one month London Interbank Offered Rate (LIBOR). Your rate will be calculated each month by adding a margin between 1.82% and 5.50% to the one month LIBOR. The rate will not increase more than once per month. Earnest rate ranges are current as of December 13, 2019, and are subject to change based on market conditions and borrower eligibility.

Auto Pay discount: If you make monthly principal and interest payments by an automatic, monthly deduction from a savings or checking account, your rate will be reduced by one quarter of one percent (0.25%) for so long as you continue to make automatic, electronic monthly payments. This benefit is suspended during periods of deferment and forbearance.

The information provided on this page is updated as of 12/13/2019. Earnest reserves the right to change, pause, or terminate product offerings at any time without notice. Earnest loans are originated by Earnest Operations LLC. California Finance Lender License 6054788. NMLS # 1204917. Earnest Operations LLC is located at 302 2nd Street, Suite 401N, San Francisco, CA 94107. Terms and Conditions apply. Visit https://www.earnest.com/terms-of-service, email us at hello@earnest.com, or call 888-601-2801 for more information on our student loan refinance product.

© 2018 Earnest LLC. All rights reserved. Earnest LLC and its subsidiaries, including Earnest Operations LLC, are not sponsored by or agencies of the United States of America.

2 Important Disclosures for SoFi.

SoFi Disclosures

  1. Student loan Refinance: Fixed rates from 3.46% APR (with AutoPay) to 7.61% APR (without AutoPay). Variable rates currently from 2.31% APR (with AutoPay) to 7.61% (without AutoPay). Interest rates on variable rate loans are capped at either 8.95% or 9.95% depending on term of loan. See APR examples and terms. Lowest variable rate of 2.31% APR assumes current 1 month LIBOR rate of 2.31% plus 0.75% margin minus 0.25% for AutoPay. If approved for a loan, the fixed or variable interest rate offered will depend on your credit history and the term of the loan and will be within the ranges of rates listed above. For the SoFi variable rate loan, the 1-month LIBOR index will adjust monthly and the loan payment will be re-amortized and may change monthly. APRs for variable rate loans may increase after origination if the LIBOR index increases. The SoFi 0.25% AutoPay interest rate reduction requires you to agree to make monthly principal and interest payments by an automatic monthly deduction from a savings or checking account. The benefit will discontinue and be lost for periods in which you do not pay by automatic deduction from a savings or checking account.

3 Important Disclosures for Figure.

Figure Disclosures

Figure’s Student Refinance Loan is a private loan. If you refinance federal loans, you forfeit certain flexible repayment options associated with those loans. If you expect to incur financial hardship that would impact your ability to repay, you should consider federal consolidation alternatives.

4 Important Disclosures for College Ave.

College Ave Disclosures

College Ave Student Loans products are made available through either Firstrust Bank, member FDIC or M.Y. Safra Bank, FSB, member FDIC. All loans are subject to individual approval and adherence to underwriting guidelines. Program restrictions, other terms, and conditions apply.

1College Ave Refi Education loans are not currently available to residents of Maine.

2All rates shown include autopay discount. The 0.25% auto-pay interest rate reduction applies as long as a valid bank account is designated for required monthly payments. Variable rates may increase after consummation.

3$5,000 is the minimum requirement to refinance. The maximum loan amount is $300,000 for those with medical, dental, pharmacy or veterinary doctorate degrees, and $150,000 for all other undergraduate or graduate degrees.

4This informational repayment example uses typical loan terms for a refi borrower with a Full Principal & Interest Repayment and a 10-year repayment term, has a $40,000 loan and a 5.5% Annual Percentage Rate (“APR”): 120 monthly payments of $434.11 while in the repayment period, for a total amount of payments of $52,092.61. Loans will never have a full principal and interest monthly payment of less than $50. Your actual rates and repayment terms may vary.

Information advertised valid as of 1/1/2020. Variable interest rates may increase after consummation.

5 Important Disclosures for Laurel Road.

Laurel Road Disclosures

Laurel Road is a brand of KeyBank National Association offering online lending products in all 50 U.S. states, Washington, D.C., and Puerto Rico. Mortgage lending is not offered in Puerto Rico. All loans are provided by KeyBank National Association.
As used throughout these Terms & Conditions, the term “Lender” refers to KeyBank National Association and its affiliates, agents, guaranty insurers, investors, assigns, and successors in interest.

This term represents the actual cost of financing to the borrower over the life of the loan expressed as a yearly rate.


There are no origination fees or prepayment penalties associated with the loan. Lender may assess a late fee if any part of a payment is not received within 15 days of the payment due date. Any late fee assessed shall not exceed 5% of the late payment or $28, whichever is less. A borrower may be charged $20 for any payment (including a check or an electronic payment) that is returned unpaid due to non-sufficient funds (NSF) or a closed account.


For bachelor’s degrees and higher, up to 100% of outstanding private and federal student loans (minimum $5,000) are eligible for refinancing. If you are refinancing greater than $300,000 in student loan debt, Lender may refinance the loans into 2 or more new loans.
For eligible Associates degrees in the healthcare field (see Eligibility & Eligible Loans section below), Lender will refinance up to $50,000 in loans for non-ParentPlus refinance loans. Note, parents who are refinancing loans taken out on behalf of a child who has obtained an associates degrees in an eligible healthcare field are not subject to the $50,000 loan maximum, refer to https://www.laurelroad.com/refinance-student-loans/refinance-parent-plus-loans/ for more information about refinancing ParentPlus loans.


Borrower, and Co-signer if applicable, must be a U.S. Citizen or Permanent Resident with a valid I-551 card (which must show a minimum of 10 years between “Resident Since” date and “Card Expires” date or has no expiration date); state that they are of at least borrowing age in the state of residence at the time of application; and meet Lender underwriting criteria (including, for example, employment, debt-to-income, disposable income, and credit history requirements).

Graduates may refinance any unsubsidized or subsidized Federal or private student loan that was used exclusively for qualified higher education expenses (as defined in 26 USC Section 221) at an accredited U.S. undergraduate or graduate school. Any federal loans refinanced with Lender are private loans and do not have the same repayment options that federal loan program offers such as Income Based Repayment or Income Contingent Repayment.

All loans must be in grace or repayment status and cannot be in default. Borrower must have graduated or be enrolled in good standing in the final term preceding graduation from an accredited Title IV U.S. school and must be employed, or have an eligible offer of employment. Parents looking to refinance loans taken out on behalf of a child should refer to https://www.laurelroad.com/refinance-student-loans/refinance-parent-plus-loans/ for applicable terms and conditions.

For Associates Degrees: Only associates degrees earned in one of the following are eligible for refinancing: Cardiovascular Technologist (CVT); Dental Hygiene; Diagnostic Medical Sonography; EMT/Paramedics; Nuclear Technician; Nursing; Occupational Therapy Assistant; Pharmacy Technician; Physical Therapy Assistant; Radiation Therapy; Radiologic/MRI Technologist; Respiratory Therapy; or Surgical Technologist. To refinance an Associates degree, a borrower must also either be currently enrolled and in the final term of an associate degree program at a Title IV eligible school with an offer of employment in the same field in which they will receive an eligible associate degree OR have graduated from a school that is Title IV eligible with an eligible associate and have been employed, for a minimum of 12 months, in the same field of study of the associate degree earned.


The interest rate you are offered will depend on your credit profile, income, and total debt payments as well as your choice of fixed or variable and choice of term. For applicants who are currently medical or dental residents, your rate offer may also vary depending on whether you have secured employment for after residency.


The repayment of any refinanced student loan will commence (1) immediately after disbursement by us, or (2) after any grace or in-school deferment period, existing prior to refinancing and/or consolidation with us, has expired.


After loan disbursement, if a borrower documents a qualifying economic hardship, we may agree in our discretion to allow for full or partial forbearance of payments for one or more 3-month time periods (not to exceed 12 months in the aggregate during the term of your loan), provided that we receive acceptable documentation (including updating documentation) of the nature and expected duration of the borrower’s economic hardship.

We may agree under certain circumstances to allow a borrower to make $100/month payments for a period of time immediately after loan disbursement if the borrower is employed full-time as an intern, resident, or similar postgraduate trainee at the time of loan disbursement. These payments may not be enough to cover all of the interest that accrues on the loan. Unpaid accrued interest will be added to your loan and monthly payments of principal and interest will begin when the post-graduate training program ends.

We may agree under certain circumstances to allow postponement (deferral) of monthly payments of principal and interest for a period of time immediately following loan disbursement (not to exceed 6 months after the borrower’s graduation with an eligible degree), if the borrower is an eligible student in the borrower’s final term at the time of loan disbursement or graduated less than 6 months before loan disbursement, and has accepted an offer of (or has already begun) full-time employment.

If Lender agrees (in its sole discretion) to postpone or reduce any monthly payment(s) for a period of time, interest on the loan will continue to accrue for each day principal is owed. Although the borrower might not be required to make payments during such a period, the borrower may continue to make payments during such a period. Making payments, or paying some of the interest, will reduce the total amount that will be required to be paid over the life of the loan. Interest not paid during any period when Lender has agreed to postpone or reduce any monthly payment will be added to the principal balance through capitalization (compounding) at the end of such a period, one month before the borrower is required to resume making regular monthly payments.


This information is current as of November 8, 2019 and is subject to change.

6 Important Disclosures for Splash Financial.

Splash Financial Disclosures

Terms and Conditions apply. Splash reserves the right to modify or discontinue products and benefits at any time without notice. Rates and terms are also subject to change at any time without notice. Offers are subject to credit approval. To qualify, a borrower must be a U.S. citizen or permanent resident in an eligible state and meet applicable underwriting requirements. Not all borrowers receive the lowest rate. Lowest rates are reserved for the highest qualified borrowers.

7 Important Disclosures for CommonBond.

CommonBond Disclosures

Offered terms are subject to change. Loans are offered by CommonBond Lending, LLC (NMLS # 1175900). If you are approved for a loan, the interest rate offered will depend on your credit profile, your application, the loan term selected and will be within the ranges of rates shown. All Annual Percentage Rates (APRs) displayed assume borrowers enroll in auto pay and account for the 0.25% reduction in interest rate. All variable rates are based on a 1-month LIBOR assumption of 1.76% effective November 10, 2019.

8 Important Disclosures for LendKey.

LendKey Disclosures

Refinancing via LendKey.com is only available for applicants with qualified private education loans from an eligible institution. Loans that were used for exam preparation classes, including, but not limited to, loans for LSAT, MCAT, GMAT, and GRE preparation, are not eligible for refinancing with a lender via LendKey.com. If you currently have any of these exam preparation loans, you should not include them in an application to refinance your student loans on this website. Applicants must be either U.S. citizens or Permanent Residents in an eligible state to qualify for a loan. Certain membership requirements (including the opening of a share account and any applicable association fees in connection with membership) may apply in the event that an applicant wishes to accept a loan offer from a credit union lender. Lenders participating on LendKey.com reserve the right to modify or discontinue the products, terms, and benefits offered on this website at any time without notice. LendKey Technologies, Inc. is not affiliated with, nor does it  endorse,  any educational institution.

Subject to floor rate and may require the automatic payments be made from a checking or savings account with the lender. The rate reduction will be removed and the rate will be increased by 0.25% upon any cancellation or failed collection attempt of the automatic payment and will be suspended during any period of deferment or forbearance. As a result, during the forbearance or suspension period, and/or if the automatic payment is canceled, any increase will take the form of higher payments. The lowest advertised variable APR is only available for loan terms of  5 years and is reserved for applicants with FICO scores of at least 810.

As of 12/019/2019 student loan refinancing rates range from 1.90% to 8.59% Variable APR with AutoPay and 3.49% to 7.75% Fixed APR with AutoPay.

1.99% – 6.89%1Undergrad
& Graduate

Visit Earnest

2.31% – 7.36%2Undergrad
& Graduate

Visit SoFi

2.06% – 6.81%3Undergrad
& Graduate

Visit Figure

2.62% – 6.12%4Undergrad
& Graduate

Visit College Ave

2.29% – 6.65%5Undergrad
& Graduate

Visit Laurel Road

1.99% – 7.06%6Undergrad
& Graduate

Visit Splash

1.81% – 6.29%7Undergrad
& Graduate

Visit CommonBond

1.90% – 8.59%8Undergrad
& Graduate

Visit Lendkey

Our team at Student Loan Hero works hard to find and recommend products and services that we believe are of high quality. We sometimes earn a sales commission or advertising fee when recommending various products and services to you. Similar to when you are being sold any product or service, be sure to read the fine print to help you understand what you are buying. Be sure to consult with a licensed professional if you have any concerns. Student Loan Hero is not a lender or investment advisor. We are not involved in the loan approval or investment process, nor do we make credit or investment related decisions. The rates and terms listed on our website are estimates and are subject to change at any time.

Published in Big Money Decisions, Credit & Debt, Spend Less