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

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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 6 lenders of 2018!
LenderVariable APREligible Degrees 
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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 3.89% APR (with Auto Pay) to 7.89% APR (with Auto Pay). Variable rate loan rates range from 2.47% APR (with Auto Pay) to 6.97% 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 Month/Day/Year, 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 08/21/18. 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 ourstudent 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 Laurel Road.

Laurel Road Disclosures

APR stands for “Annual Percentage Rate.” Rates listed include a 0.25% EFT discount, for automatic payments made from a checking or savings account. Interest rates as of 11/8/2018. Rates subject to change.

Variable rate options consist of a range from 3.27% per year to 6.09% per year for a 5-year term, 4.64% per year to 6.14% per year for a 7-year term, 4.69% per year to 6.19% per year for a 10-year term, 4.94% per year to 6.44% per year for a 15-year term, or 5.19% per year to 6.69% per year for a 20-year term, with no origination fees. APR is subject to increase after consummation. The variable interest rate will change on the first day of every month (“Change Date”) if the Current Index changes. The variable interest rates are based on a Current Index, which is the 1-month London Interbank Offered Rate (LIBOR) (currency in US dollars), as published on The Wall Street Journal’s website. The variable interest rates and Annual Percentage Rate (APR) will increase or decrease when the 1-month LIBOR index changes. The variable interest rates are calculated by adding a margin ranging from 0.98% to 3.80% for the 5-year term loan, 2.35% to 3.85% for the 7-year term loan, 2.40% to 3.90% for the 10-year term loan, 2.65% to 4.15% for the 15-year term loan, and 2.90% to 4.40% for the 20-year term loan, respectively, to the 1-month LIBOR index published on the 25th day of each month immediately preceding each “Change Date,” as defined above, rounded to two decimal places, with no origination fees. If the 25th day of the month is not a business day or is a US federal holiday, the reference date will be the most recent date preceding the 25th day of the month that is a business day. The monthly payment for a sample $10,000 loan at a range of 3.27% per year to 6.09% per year for a 5-year term would be from $180.89 to $193.75. The monthly payment for a sample $10,000 loan at a range of 4.64% per year to 6.14% per year for a 7-year term would be from $139.65 to $146.76. The monthly payment for a sample $10,000 loan at a range of 4.69% per year to 6.19% per year for a 10-year term would be from $104.56 to $111.98. The monthly payment for a sample $10,000 loan at a range of 4.94% per year to 6.44% per year for a 15-year term would be from $78.77 to $86.78. The monthly payment for a sample $10,000 loan at a range of 5.19% per year to 6.69% per year for a 20-year term would be from $67.05 to $75.68.

However, if the borrower chooses to make monthly payments automatically by electronic funds transfer (EFT) from a bank account, the variable rate will decrease by 0.25%, and will increase back up to the regular variable interest rate described in the preceding paragraph if the borrower stops making (or we stop accepting) monthly payments automatically by EFT from the designated borrower’s bank account.


3 Important Disclosures for SoFi.

SoFi Disclosures

  1. Student loan Refinance:
    Fixed rates from 3.899% APR to 7.979% APR (with AutoPay). Variable rates from 2.470% APR to 6.990% APR (with 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 2.470% APR assumes current 1 month LIBOR rate of 2.30% plus 0.91% margin minus 0.25% ACH discount. Not all borrowers receive the lowest rate. If approved for a loan, the fixed or variable interest rate offered will depend on your creditworthiness, and the term of the loan and other factors, 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. *To check the rates and terms you qualify for, SoFi conducts a soft credit inquiry. Unlike hard credit inquiries, soft credit inquiries (or soft credit pulls) do not impact your credit score. Soft credit inquiries allow SoFi to show you what rates and terms SoFi can offer you up front. After seeing your rates, if you choose a product and continue your application, we will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit inquiry. Hard credit inquiries (or hard credit pulls) are required for SoFi to be able to issue you a loan. In addition to requiring your explicit permission, these credit pulls may impact your credit score.
  2. Terms and Conditions Apply. SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE. To qualify, a borrower must be a U.S. citizen or permanent resident in an eligible state and meet SoFi’s underwriting requirements. Not all borrowers receive the lowest rate. To qualify for the lowest rate, you must have a responsible financial history and meet other conditions. If approved, your actual rate will be within the range of rates listed above and will depend on a variety of factors, including term of loan, a responsible financial history, years of experience, income and other factors. Rates and Terms are subject to change at anytime without notice and are subject to state restrictions. SoFi refinance loans are private loans and do not have the same repayment options that the federal loan program offers such as Income Based Repayment or Income Contingent Repayment or PAYE. Licensed by the Department of Business Oversight under the California Financing Law License No. 6054612. SoFi loans are originated by SoFi Lending Corp., NMLS # 1121636. (www.nmlsconsumeraccess.org)

4 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.


5 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 2.28% effective October 10, 2018.


6 Important Disclosures for Citizens Bank.

Citizens Bank Disclosures

  1. Education Refinance Loan Rate Disclosure: Variable rate, based on the one-month London Interbank Offered Rate (“LIBOR”) published in The Wall Street Journal on the twenty-fifth day, or the next business day, of the preceding calendar month. As of November 1, 2018, the one-month LIBOR rate is 2.29%. Variable interest rates range from 2.79%-8.39% (2.79%-8.39% APR) and will fluctuate over the term of the borrower’s loan with changes in the LIBOR rate, and will vary based on applicable terms, level of degree earned and presence of a cosigner. Fixed interest rates range from 3.75%-8.69% (3.75%-8.69% APR) based on applicable terms, level of degree earned and presence of a cosigner. Lowest rates shown require application with a cosigner, are for eligible, creditworthy applicants with a graduate level degree, require a 5-year repayment term and include our Loyalty discount and Automatic Payment discounts of 0.25 percentage points each, as outlined in the Loyalty and Automatic Payment Discount disclosures. The maximum variable rate on the Education Refinance Loan is the greater of 21.00% or Prime Rate plus 9.00%. Subject to additional terms and conditions, and rates are subject to change at any time without notice. Such changes will only apply to applications taken after the effective date of change. Please note: Due to federal regulations, Citizens Bank is required to provide every potential borrower with disclosure information before they apply for a private student loan. The borrower will be presented with an Application Disclosure and an Approval Disclosure within the application process before they accept the terms and conditions of their loan.
  2. Federal Loan vs. Private Loan Benefits: Some federal student loans include unique benefits that the borrower may not receive with a private student loan, some of which we do not offer with the Education Refinance Loan. Borrowers should carefully review their current benefits, especially if they work in public service, are in the military, are currently on or considering income based repayment options or are concerned about a steady source of future income and would want to lower their payments at some time in the future. When the borrower refinances, they waive any current and potential future benefits of their federal loans and replace those with the benefits of the Education Refinance Loan. For more information about federal student loan benefits and federal loan consolidation, visit http://studentaid.ed.gov/. We also have several resources available to help the borrower make a decision at http://www.citizensbank.com/EdRefinance, including Should I Refinance My Student Loans? and our FAQs. Should I Refinance My Student Loans? includes a comparison of federal and private student loan benefits that we encourage the borrower to review.
  3. Citizens Bank Education Refinance Loan Eligibility: Eligible applicants may not be currently enrolled. Applicants with an Associate’s degree or with no degree must have made at least 12 qualifying payments after leaving school. Qualifying payments are the most recent on time and consecutive payments of principal and interest on the loans being refinanced. Primary borrowers must be a U.S. citizen, permanent resident or resident alien with a valid U.S. Social Security Number residing in the United States. Resident aliens must apply with a cosigner who is a U.S. citizen or permanent resident. The cosigner (if applicable) must be a U.S. citizen or permanent resident with a valid U.S. Social Security Number residing in the United States. For applicants who have not attained the age of majority in their state of residence, a cosigner will be required. Citizens Bank reserves the right to modify eligibility criteria at anytime. Interest rate ranges subject to change. Education Refinance Loans are subject to credit qualification, completion of a loan application/consumer credit agreement, verification of application information, certification of borrower’s student loan amount(s) and highest degree earned.
  4. Loyalty Discount Disclosure: The borrower will be eligible for a 0.25 percentage point interest rate reduction on their loan if the borrower or their co-signer (if applicable) has a qualifying account in existence with us at the time the borrower and their co-signer (if applicable) have submitted a completed application authorizing us to review their credit request for the loan. The following are qualifying accounts: any checking account, savings account, money market account, certificate of deposit, automobile loan, home equity loan, home equity line of credit, mortgage, credit card account, or other student loans owned by Citizens Bank, N.A. Please note, our checking and savings account options are only available in the following states: CT, DE, MA, MI, NH, NJ, NY, OH, PA, RI, and VT and some products may have an associated cost. This discount will be reflected in the interest rate disclosed in the Loan Approval Disclosure that will be provided to the borrower once the loan is approved. Limit of one Loyalty Discount per loan and discount will not be applied to prior loans. The Loyalty Discount will remain in effect for the life of the loan.
  5. Automatic Payment Discount Disclosure: Borrowers will be eligible to receive a 0.25 percentage point interest rate reduction on their student loans owned by Citizens Bank, N.A. during such time as payments are required to be made and our loan servicer is authorized to automatically deduct payments each month from any bank account the borrower designates. Discount is not available when payments are not due, such as during forbearance. If our loan servicer is unable to successfully withdraw the automatic deductions from the designated account three or more times within any 12-month period, the borrower will no longer be eligible for this discount.
  6. Co-signer Release: Borrowers may apply for co-signer release after making 36 consecutive on-time payments of principal and interest. For the purpose of the application for co-signer release, on-time payments are defined as payments received within 15 days of the due date. Interest only payments do not qualify. The borrower must meet certain credit and eligibility guidelines when applying for the co-signer release. Borrowers must complete an application for release and provide income verification documents as part of the review. Borrowers who use deferment or forbearance will need to make 36 consecutive on-time payments after reentering repayment to qualify for release. The borrower applying for co-signer release must be a U.S. citizen or permanent resident. If an application for co-signer release is denied, the borrower may not reapply for co-signer release until at least one year from the date the application for co-signer release was received. Terms and conditions apply.

2.47% – 6.99%3Undergrad
& Graduate

Visit SoFi

2.57% – 6.97%1Undergrad
& Graduate

Visit Earnest

2.51% – 8.09%4Undergrad
& Graduate

Visit Lendkey

3.02% – 6.44%2Undergrad
& Graduate

Visit Laurel Road

2.50% – 7.24%5Undergrad
& Graduate

Visit CommonBond

2.79% – 8.39%6Undergrad
& Graduate

Visit Citizens

Our team at Student Loan Hero works hard to find and recommend products and services that we believe are of high quality and will make a positive impact in your life. 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 understand what you are buying, and consult 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. Please do your homework and let us know if you have any questions or concerns.