Ways to Get Out of Debt Even When You’re Broke
Do you want to get out of debt but feel like you never will? How do you get yourself out of debt when you’re living paycheck to paycheck?
Do you feel like your credit card debt is never-ending? How about your student loan debt?
Do you have car payments? A mortgage? Maybe a personal loan?
After reading this blog post you will be more motivated to pay off debt and have a plan to do so!
No matter what type of debt you have, you’re probably dreaming of the day you’ll be debt-free and I’m here to say it’s possible.
I won’t lie, it won’t happen overnight but the good news is that, no matter how high the mountain of debt appears, you can climb it and become debt-free.
Let’s get started on how you can tackle that debt and become debt-free………
ADD UP YOUR DEBTS
You want to get out of debt but do you actually know how much debt you’re in? I mean REALLY know how much debt you have in your life.
Adding up your debt can be scary at first but once you do you’ll be amazed at how much faster you pay it off and how much more motivated you’ll be to get it paid off.
Even if you’re in shock and disbelief after adding it up, just know that it can be paid off and that many people have been where you are and are now debt-free.
I’ll share resources with you later in this article to help you get motivated by other people’s journeys so you won’t feel so alone.
Grab a piece of paper, a notebook or use debt tracker printable, whatever you prefer, and start adding up your debt!
Go through all of your credit card statements and write down the balances.
Do you have car loans, personal loans, student loans, medical bills, etc? Write them all down.
While you’re going through your statements, go ahead and write down the interest rates and the minimum payment amounts as well.
You’ll need this information to make your debt pay off plan (we go over how soon).
TRACK YOUR SPENDING & CREATE A BUDGET
Now that you know the amount of debt you have you need a full financial picture of your finances so that you can find some money to pay off that debt.
You need to know exactly where your money is going and how much you’re spending in certain areas.
You will also need to know how much income is coming in so write that down as well.
For your first budget be as accurate as you can be. Check your bank and credit card statements, your receipts, etc to add up all of your expenses.
Estimating will be ok for your first budget but you’ll need to get a lot more accurate starting now.
Start tracking your spending for the next few months so you’ll be more accurate in your budget numbers and to keep yourself on track.
Plus by doing this you will also be more aware of your spending habits.
Use a small notebook, the notes app on your phone, or a spending tracker and budget printables to help (sign up below this article to grab your free budget printables).
Do whatever works for you. If you like apps use an app. If you prefer to write it all down at the end of every day that’s fine too but just be sure not to forget anything.
Once you have all your income and expenses recorded you’ll be able to see what areas you need to make adjustments in.
Need extra help creating your budget? Check out How to Create an Effective Budget.
FIND MONEY TO PAY OFF DEBT
Look at the budget you created in the last step, is there any money left over at the end of the month? Maybe you’re at a negative each month?
Are you spending too much money in certain areas? Are there any areas you can see right away that you can make cuts in?
Easy cuts can include taking lunch to work a few days a week. Eating at home more, skipping the coffee shop, skipping the weekly mall trip, etc.
Since it would be almost impossible for me to go over every scenario and know which area you can make cuts in without seeing your budget, I’m going to link to a bunch of articles I’ve written that will help you save a ton of money.
The goal here is to free up as much money as you can to put towards your debt.
Feel free to leave a comment on this article if you cannot find what you’re looking for. I read all my comments!
CHECK THESE OTHER HELPFUL ARTICLES WITH MORE IN-DEPTH INFORMATION ON SAVING MONEY:
- 101 Ways to Save Money
- Get Rid of Cable and Still Watch What You Want
- 21 Eco-Friendly Products that Save You Tons of Money
- How to Save Money on Gas
- How I saved over $800 on my Homeowners Insurance
- The Best Ways to Save Money on Groceries
- Turn Your Receipts into Money
- How to Wash Dry Clean Only Clothes at Home
MAKE A DEBT REPAYMENT PLAN
Now that you have your budget and you went through all the ways you can reduce your expenses, it’s time to make a plan. NOTE: I’ll go over how to make more money in the next section.
There are two popular methods of paying off debt. One is the Debt Snowball and one is the Debt Avalanche.
In the Debt Snowball, you’re going to list your debts smallest to largest and tackle your smallest debt first (while paying the minimum on all your other debts). Once that smallest one is paid off use that money to pay down your next smallest balance etc until all are paid off.
In the Debt Avalanche, you tackle the debt with the highest interest rate first regardless of the balance.
The reason I suggest the debt snowball as the best method for most people is that it gives you the momentum to keep going.
With the debt snowball, because you’re going from the smallest debt to largest debt you’re going to be eliminating individual debts faster and crossing them off your list of debts. Each time you do this you will feel a small win and small wins are what motivate most people to continue!
It’s all about mindset!
HOW TO MAKE YOUR DEBT PAYOFF PLAN USING THE DEBT SNOWBALL:
Step 1: List your debts from smallest to largest regardless of the interest rate.
Step 2: Continue to make minimum payments on all your debts except the smallest one.
Step 3: Pay as much as possible on your smallest debt. All the extra money you free up with your budget or make in the next section will go towards this debt until its paid off.
Step 4: Once you pay off the smallest debt put the money you were using to pay that debt towards the next smallest debt and so on. Repeat until each debt is paid in full.
If you decide to go with the Debt Avalanche method you would pretty much follow the same steps except you will list your debts from the highest interest rate to lowest interest rate. Then you will start tackling the highest interest rate first and work your way down.
MAKE MORE MONEY
If you want to get your debt paid off faster you will need to make more money.
I know that not everyone can go out and get a second job because of children and other circumstances so I wanted to go through a bunch of ways you can make some money to pay down your debt besides the obvious one of getting a second job.
SELL YOUR STUFF
Look around your house! Do you have things you can sell?
With Apps like Facebook Marketplace and Poshmark, it’s so much easier than you think to sell stuff. Plus you can usually make more money on each item than what you would make at a yard sale (although a yard sale is also an option).
I recommend using Poshmark to sell your clothes and other smaller items. Check out How to Sell on Poshmark (My Experience).
For items too large or heavy to sell on Poshmark, I would recommend using Facebook Marketplace. I buy from Facebook Marketplace all the time so I know it works. Plus it’s free and only takes a few minutes to use.
Keep in mind to always play it safe when selling larger items that people will need to come to your house to pick up. Have someone home with you and try to have the item ready to go when they arrive.
GET A SIDE HUSTLE
Another way to make money is by starting a side hustle in your spare time.
Some possible side hustles could include:
Become an Instacart Shopper.
Become a Pet Sitter. Check out Rover.com and Care.com.
Become a caregiver! Care.com is a great place to find caregiving jobs.
Any extra money you make can be used to pay down your debt faster!
STOP TAKING ON MORE DEBT
If you’re trying to get out of debt then you need to stop taking on more debt.
Stop using your credit cards and go to a cash or debit card system. I recommend a cash system because using cash lets us feel the emotion of spending money.
Try the cash envelope system made famous by Dave Ramsey. Basically, it’s a system where you put a budgeted amount of cash into envelopes for each category (food, gas, etc). The amount would have been determined while you were making your budget.
When that envelope is empty that means you cannot spend any more money in that area. You don’t always have to carry all the envelopes with you just bring what you need so you’re not carrying a bunch of cash in your wallet.
If you want to get fancy grab a cute cash envelope wallet to keep it all organized.
Just try it! Most people find they will spend less because they don’t like the idea of parting with cash versus just swiping a card all day and not thinking about it.
GET AND STAY MOTIVATED
Honestly, this is one of the most important steps! You need to stay motivated and be around people who have the same mindset as you and want to pay off debt.
You may not have anyone in your life like this but that’s ok because like I mentioned earlier there are many resources out there to keep you motivated.
There are online communities of like-minded people who are also trying to pay off debt and stay motivated.
You can also keep yourself motivated and on track by listening to experts and reading books.
Let’s go over some of my favorite ways to stay motivated below.
There are podcasts devoted to money issues and debt. Podcasts are free and you can listen to them in the car, at the gym, and even while you’re cleaning your house.
One of my favorite podcasts about money is the Dave Ramsey podcast. If you want to get motivated to pay off debt you need to listen to him. He tells it like it is but he also showcases tons of real people just like you who have done it! This is the community I was talking about earlier.
Check out all My Favorite Podcasts about Money to add to your podcast player on your phone, tablet or even your computer.
I love books to keep me motivated. Here are just a few I would recommend for your debt-free journey.
You should also check out 20 Personal Finance Books that Will Change the Way You Think About Money.
Take a course! Taking a course can get you into gear, yes you may have to shell out a small amount of money for one but the knowledge and motivation you will get out of it will pay off in the long run.
Some of my favorite courses include:
THE FINANCIAL RENOVATION
The Financial Renovation is a course taught by Lauren Greutman who is a wife, mother of 4, entrepreneur, frugal living enthusiast, and author of the book The Recovering Spender.
Lauren has been helping hundreds of thousands of people save money, live within their means, enjoy life on a budget, and pay off hundreds of thousands of dollars in debt over the past decade. And she herself has been there. She and her husband were in $40,000 of debt and running a $1,000 deficit each month and within 2 years they paid it all off, without getting a pay raise!
In her course she will teach you her complete system for budgeting, paying off debt, making more money (methods you never knew existed!) and saving for the future.
This course is usually $99 alone and well worth it but if you grab it as part of the Master Your Money Bundle you get this course as well as 44 other personal finance resources for under $50!
Check out the Master Your Money Bundle here and once you get access go ahead and get started on Lauren’s course.
Oh and included in this bundle will be the ebook version of The Financial Reboot which is the course I am mentioning next!
This bundle cannot be beaten as far as resources to get you pumped and motivated. Plus it comes with all sorts of planners and printables you can use to keep you on track!
This course is taught by Tracie Fobes. Tracie is the owner of Penny Pinchin’ Mom. She not only is a money-saving expert but she and her husband have actually paid off over $37,000 in debt and they did it in 27 months! So she knows what she is talking about.
Check out The Financial Reboot Course.
Debt is a problem that happens to a lot of people at some point. Even wealthy people find themselves overextended by debt so stay motivated!
Even if you’re working on a seemingly impossible budget, it’s possible to pull yourself out of debt if you actually do the work needed to get yourself there. Read this article daily if you need to and work on your money mindset by following the section on how to stay motivated.
It will all be worth it once you’re debt-free :).
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