How do I get out of debt when I am broke? After all, if I had the money, I would not be in debt in the first place. I hear this from people, just like you. It is often not how much money you make, but the debt payoff plan you are using that is not working. It is possible to get out of debt on a lower income; you just need to learn how.
There are plenty of inspiring stories of people sharing how they get out of debt, despite not making much money. In fact, you may feel you relate. But yet, you don’t think you can do it. For whatever reason, you think you can’t get out of debt as they did. It is impossible.
Or is it?
My husband and I were living on one income when we decided it was time to get out of debt. It took us nearly 2 1/2 years, but were able to pay off more than $37,000 in debt. There are countless other stories of our readers who have paid off similar amounts in even less time.
I am here to tell you that you CAN (and should) get out of debt – no matter how little money you may make!!
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IS IT POSSIBLE TO GET OUT OF DEBT?
I am going to share the steps anyone can follow to learn how to get out of debt – no matter your income level. If you struggle to make ends meet, you already know how to make the most of a dollar, and I’ll give you additional tips so that you can pay down that debt.
I have asked this on Facebook all of the time, and some of the comments include:
“There is no way I can do this. Not with my medical bills.”
“Sure, that only works or some people – not me.”
Many of you may be thinking similar things, and I completely understand that way of thinking. I was there myself and know that it seems like an unattainable goal. That is why you are reading this right now – to find out how to make this dream a reality.
Debt is NOT a Good Thing.
If you are in debt, it could be because of your own decisions or even those you can’t control (such as health, job loss, etc.). No matter how you got into debt, you need to get rid of it. Period.
The reason you need to eliminate your debt is that it genuinely is holding you back. How can you move forward financially with debt in your way? If you found that you needed to buy a new car, you would find a way, correct? For most, that would probably mean an additional monthly payment – but you would do it because you needed to. You need to look at debt the same way:
“Getting out of debt is not a desire – it is a need.”
MY DEBT FREE STORY
I remember in 2009 when my husband and I thought there was no way we could get out of debt. It was an impossible dream. At that time, I was not working at that time, and so we had one income and two young children to feed. I initially thought that there was no way at all that we could do this. It was just not possible.
We started by looking at our finances (oh – they were awful). Our goal was to live a great life. We could have kept on and kept just getting by, but that was not how we wanted to live. Just “getting by” was no longer an option.
Knowing our kids would be watching us, we knew the importance of being a good role model for them. We wanted them to learn how to handle money by following our example.
We both agreed that not having debt was pivotal in having a positive financial future. We wanted this not only for ourselves but our children as well. It was also essential for our marriage. We needed to remove anything that could potentially cause stress – money, and finances being a big one. Our relationship was good, but we knew we could even make it better.
To begin our journey, we read Dave Ramsey’s Total Money Makeover. We followed much of his advice but figured out some things that worked for us as well. Being debt free is a fantastic feeling that no one can describe. You have to live it.
THE FIRST STEP TO GETTING OUT OF DEBT
The very first step to getting out of debt is to decide you want to do it. That was the change both my husband, and I made. Once we were ready and committed to getting out of debt, we began our journey.
You might be saying that you can’t do that though. I’m here to say that you can – when you really, truly want to make it happen.
Getting out of debt doesn’t require you to be rich. Anyone can do it. Like I said above, knowing that you want to make the changes and pay off your debt is only one small part. The more significant issue is how in the world you actually can do this.
I’ve got the tips you need to teach you how to get out of debt with little to no money.
1. Face YOUR Reality
According to CNN Money, the average American family made around $59,000 in 2017. While that is the average, it is also true that many Americans make much less than this.
With a lower income, it is even more critical that you have no debt at all. After all, you are already stretching every dollar to cover your bills. You don’t need additional debt payments causing more financial stress.
Unless you win the lottery, a wealthy relative leaves you a small fortune, or you find a better job, you know your income won’t change. That is the truth. You can’t change that.
However, what you can and must do is take the steps you can to work yourself out from under the mountain of debt you may be facing. We will teach you about how to create a budget, determine how much debt you have and then how you can pay it off – even if you do not make much money.
2. Fully Commit
If you are not 100% ready to make changes, then you are destined for failure. It may be blunt, but it is true. If you can’t “go all in” and fully commit to making whatever difficult changes necessary (trust me, it will be challenging), then you need to stop reading right now.
If you are ready to make this lifestyle change, then read on. You’ve already made huge strides to making changes in your life.
3. Create (and use) a Budget and Debt Snowball Form
This is paramount to getting out of debt. Without your budget, you can’t even consider getting out of debt. It is the very first thing you need to do. We’ve created an entire post to help you learn about budgeting – even if you have never used one before. It is not difficult, but it can (and will) be very eye-opening. You will also need to create a debt snowball – so you can see your debts and learn HOW you will tackle them.
I always say to look at paying off debt like a football team. Each part of your finances is involved in the game:
Home Team – This is you and your family
Visiting Team – These are your debts and expenses
Your End Zone – This is where you will be debt free
PlayBook – Budget and debt snowball forms
Football – Your money
Refs and Penalties – Unexpected instances which set you back in reaching your goals
You would never expect a team to run onto the field and play the game without having the proper plays in mind. The same is true for you; If every one of the members of your family has a different idea as to how to get your money down the field to pay off your debts, you will never make it there.
Instead, you design smart plays and work together to get there. You work to get your money past all of the expenses you need to dodge. There may be setbacks, and you may have to move back before you can get forward. However, with hard work, you will get there. You will get onto the scoreboard – and end up claiming victory!
Without a financial plan, you can’t go forward. You might want to start out by taking our FREE five-day budget course. It will kick-start your plan to get out of debt.
4. Find extra money
Before you jump in to try to pay off debts, you need to have savings. The reason is that if an emergency comes up, you need to pay for it – in cash. You do not want to run to your credit card to cover the expense. It is best to have at least $1,000 in the bank before you get started.
So, before you jump in to pay off those debts, you listed above, make sure you’ve got money in the bank to cover your unforeseen expenses but Creating an Emergency Fund.
Once you have that done, then you are going to have to find a way to squeeze everything you can out of every cent. For some, it may mean no longer dining out. For others, it could be shutting off cable television. Where there is a will, there will always be a way to make this happen. You just have to do what you can!
I share this true story in our budget post, but I’m putting it here again for you! My husband and I gave up dining out. No joke. We ate dinner out very infrequently.
While I look back and think it might have been once every couple of weeks, I asked my husband recently, and he said that we were lucky to eat out once a month! It was painful, but now that we’ve cut down out all of our debts, we have income freed up so we can have dinner out more frequently (if we so desire).
For even more inspiration and ideas, you may have to find some radical ways you can get cash to help you get out of debt. Do whatever it takes (legally and within reason, of course), to help you get out of debt.
Read More: 60 Creative Ways to Save or Make Money
5. What if I’ve Saved All I Can – But that Still Doesn’t Help?
To be honest, if you are struggling to make ends meet on a low income, you won’t be able to just cut enough out of your budget to pay off your debt. Like my mom use to say – “You can’t get blood out of a turnip” – which means if it isn’t there-there is nothing you can do about it.
That is the truth, and I’m not trying to lie to you. I am realistic and know that if you are making barely enough to cover your expenses, you won’t have any extra money for your debt. I get that.
You can’t save enough money on your budget to eliminate your debt. Well, I guess you could, but that is going to take a very, very, VERY long time. So, what do you do when you’ve saved all you can and still can’t pay off your debts? Well, you just have to get creative.
For some this may mean finding items you no longer need, which you can sell to raise money. When we did this step, we had the same issue. We could not cut anything more from our budget.
For us, this meant selling items we no longer needed. We did a large cleanout and got rid of furniture and other things we were holding onto, just in case we needed them. By doing this, we were able to come up with several thousand dollars — 100% of which went immediately towards our debt.
If that isn’t an option, you might want to consider getting a second job or side business to bring in income to indeed help you get out of debt. We also did this. I started my website. Now, let me be Frank in saying that this is not a great way to make money. Most blogs make little to nothing in the first couple of years. I was lucky, and we did pretty well, and I was able to bring a bit more each year – all of which helped us to pay off our debts.
It may not be a blog, but perhaps babysitting, or cleaning houses, raking leaves, shoveling snow — there are all sorts of ways that you can make money.
Read More: Unique Ways to Make Money From Home
It is not the income that is holding most people back, it is the understanding and knowing even where to start. You might have to scale back on various spending aspects of your life, but when you get to scream from the rooftops — WE’RE DEBT FREE!!!! — it will be worth it all. I promise you!!!