It isn’t easy to get out of debt, but it’s even harder to accomplish this feat if you have any money to spare. Fortunately, it is possible to get out of debt even when you’re broke, but you have to make some financial changes first. Here are eight ways you can make this happen.
- Make a Budget
Creating a budget will allow you to make better decisions about your money and provide you with an idea of how much you can afford to put towards your debt each month. Furthermore, creating a budget will help you figure out where you might be able to free up some money to help pay down your debt.
- Create A Plan to Handle Your Debt
If you have multiple bills with various due dates and interest rates, it’s easy to be overwhelmed. To get a handle on all your debt, you might want to consider a debt consolidation loan. By consolidating all your debt under one loan, you only have to worry about making one payment. Additionally, you may be able to get a lower interest rate, which will lower your total debt.
- Determine If You’re Broke or Overspending
Do you call yourself broke because you’ve spent all your money on nonessentials? If this is the case, then you’re not really broke; you’re just financially irresponsible. You can quickly rectify this by pressing pause on nonessential spending. However, if you genuinely are broke, you should avoid making it worse by spending money on things you don’t need.
- Don’t Create More Debt
If you’re broke and in debt, you need to stop accumulating debt. Therefore you should cut up your credit cards and not apply for any more loans. It can be tough to live without a credit card when you’re broke, but you need to avoid adding to your balances if you ever want to get out of debt.
- Find Ways to Cut Expenses
Look at your monthly bank statements to figure out where your money goes each month. Scrutinize each purchase and ask yourself whether this is an expense you can live without. It’s going to be hard, but you need to be ruthless and willing to make temporary sacrifices if you want to achieve your goal of getting out of debt.
- Look for Ways to Make Extra Income
If you make more money, you won’t have to rely on credit cards to make ends meet, and you’ll have more money to put towards your debt. You can grow your income by taking on a second job, performing freelance work, selling some of your things, and doing odd jobs.
- Work with Creditors to Lower Your Interest Rate
When you have a high-interest rate, it’s challenging to pay off your debt because more of your monthly payments go toward interest charges. If you lower your interest rate, this reduces the monthly amount you pay and lets you pay off your debt quicker. Speak with your creditors and see if you can negotiate a lower interest rate. If they don’t budge, consider transferring your balance to a credit card with a lower interest rate.
- Look into Consumer Credit Counseling
A credit counseling agency will work with you to review your finances and determine a budget that includes making monthly debt payments. If, after you’ve created a budget, you find that you can’t make monthly debt payments, the credit counselor will attempt to work out a debt management plan with your creditors. This plan will usually include lower monthly payments to your creditors.
Summary
It can be overwhelming to look at your debt picture, but it’s important to remember that you don’t have to tackle it all at once. If you make a budget, consolidate your debts, cut down on spending, and cut back on overspending, you should be able to handle your debts even if you’re broke. Furthermore, you may want to consider looking into ways to make additional income, seeing if you can get a lower interest rate from your creditors, and consider consumer credit counseling. So make an effort, track your progress, and celebrate your successes, and soon enough, you’ll be debt-free
