7 Realistic Options when Your Debt is Higher than Your Salary ...

When your debt is higher than your salary, you may feel as if there are very few alternatives. However, if the amount you owe is higher than your monthly salary, or several months salary, there are ways to decrease your balance. It might seem impossible, yet it's very doable. Here are seven realistic options when your debt is higher than your salary.

1. Reduce Your 401(k) Contributions

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Many financial experts recommend never borrowing against, or reducing 401(k) contributions. I also agree. However, when your debt is higher than your salary, temporarily reducing contributions can increase your paycheck by several hundred dollars a month. This is probable if you reduce contributions from 6% to 3% or 2%. Take the extra money and apply it to your outstanding balances. And once you pay off your debt, increase your contribution.

2. Consider Individual Health Insurance Plans

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If your employer offers health insurance, your group premium may not be the cheapest available. Since group rates are based on the overall health of all employees enrolled in the plan, you might find an individual plan cheaper. Don't immediately cancel your employer group plan. Shop around and compare premiums on the individual market. If you're able to save $100 or $150 a month by switching to an individual health plan, that's approximately $1,200 you can put towards paying off debt each year.

3. Ask for a Raise

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Only ask for a raise after doing your research. For example, if your current responsibilities expand outside your original job description, or if your skill level or education is commensurate with a higher pay, these reasons justify requesting a salary increase. If your boss agrees and offers a higher salary, apply all extra cash to debt.

4. Work Overtime

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If you cannot get a raise at work, maybe you can work a few hours of overtime each week. One extra hour a day can add five hours of pay to your check. Let's say you earn $15 an hour. In this case, you're looking at a minimum of an extra $75 a week. This may not seem like a lot, but it's about $300 a month — before taxes.

5. Propose Telecommuting

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You can work at home distraction free, plus save on your weekly commute. Telecommuting is an excellent way to save because you’ll spend less money on tolls and gas, and if you're able to work at home, you might save on daycare and after school care for your children. The savings can add up quickly. Put the extra cash toward your consumer debt.

6. Take Workshops

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Look for free or inexpensive workshops or courses in your local area. The truth is, if you're able to increase your skill set and expand your knowledge, you're more likely to be recommended for raises and promotions at work. And since promotions and pay increases go hand in hand, the extra money on your check can help pay down your debt.

7. Moonlight

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Take the skills you learn at work and make cash on the side. For example, if you work for a marketing company, maybe you can offer consulting services or work on freelance marketing projects after hours. Just make sure that this is okay with your employer. Depending on the job, you might have signed a non-compete agreement when hired.

There is nothing fun about debt, and if your balances are high, it can take years to pay down the totals. But if you get creative and make better financial choices, you'll eliminate balances quicker. What easy debt elimination tips can you offer?

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