{"id":2708,"date":"2021-05-07T14:10:28","date_gmt":"2021-05-07T19:10:28","guid":{"rendered":"https:\/\/www.accrediteddebtrelief.com\/blog\/?p=2228"},"modified":"2023-12-20T17:23:05","modified_gmt":"2023-12-20T23:23:05","slug":"7-ways-to-pay-off-debt-when-you-are-broke","status":"publish","type":"post","link":"https:\/\/www.accrediteddebtrelief.com\/blog\/7-ways-to-pay-off-debt-when-you-are-broke\/","title":{"rendered":"7 Ways to Pay Off Debt When You Are Broke"},"content":{"rendered":"\n

Getting out of debt is hard for everyone, but when you\u2019re broke, it can feel impossible. Living from paycheck to paycheck is stressful. Add high-interest debt to the mix, and you\u2019ll find yourself in a vicious cycle. Trying to pay off debt when you are broke can lead to missed bill payments, overdraft fees, poor credit, and limited opportunities. <\/p>\n\n\n\n\n\n\n\n

Figuring out if the problem is the amount of money coming in OR the amount of money going out will help you decide how to take back control of your finances.<\/p>\n\n\n\n

Are you really broke or just overextended?<\/h2>\n\n\n\n

What does it mean to be broke? We often describe ourselves as \u201cbroke\u201d when we run out of money just trying to pay for essentials. However, if you have more than enough money to pay for necessities but still run out of money between paychecks every month, it may mean you are overextended. <\/p>\n\n\n\n

Broke<\/em><\/td>Overextended<\/em><\/td><\/tr>
Not enough income to cover the bare minimum<\/strong>
Focus on ways to reduce essential spending 
Look for opportunities to increase your income to make sure the basics are covered<\/td>		You exceed your income through non-essential spending<\/strong>
Focus on ways to reduce non-essential spending
Look for opportunities to increase your income to accommodate your lifestyle <\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n

So, are you broke or overextended? If you aren\u2019t sure, it\u2019s time to press pause on your spending and examine your budget. Taking a close look at your spending habits is one of seven ways to begin paying off debt when you are broke. Check out the rest below. <\/p>\n\n\n\n

1. Take Control Of Your Spending<\/h2>\n\n\n\n

If your debt is out of control, the first thing you need to do is stop adding to it. That means stop using your credit card and don\u2019t take on any new unsecured debts until what you have is under control. <\/p>\n\n\n\n

2. Create A Budget<\/h2>\n\n\n\n

Budgeting is simple math\u2014money in and money out. For your budget to work, you need to have more money coming in than you have coming out. Simple right? Well, in theory, it is. We know it can be more complex in practice, which is why you should be kind to yourself when tackling your budget. <\/p>\n\n\n\n

Focus on the big picture and categorize expenses as essential or non-essential before dividing them into more specific categories. Try using our budgeting worksheet<\/a> to get started. If traditional budgets aren\u2019t your thing, don\u2019t give up here! While old-school budgeting methods are tried and true, they aren\u2019t the only way. <\/p>\n\n\n\n

An anti-budget approach <\/a>can be great for people who have failed at traditional budgeting in the past or simply want to try a new approach. <\/p>\n\n\n\n

3. Cut Unnecessary Spending<\/h2>\n\n\n\n

According to a survey by OnePoll<\/a> the average American spends $1,497 a month ($18,000 a year) on non-essential spending. Non-essentials can include restaurant meals, takeout, impulse buys<\/a>, clothing and accessories, entertainment, alcohol, subscriptions, paid apps, personal grooming, and more. <\/p>\n\n\n\n

Be honest with yourself, but be realistic about what you decide to cut. Budget cuts shouldn\u2019t be aspirational, they need to be achievable! Remember, non-essential spending may show up in essential categories such as groceries or household products. If you typically go for brand-name products, try swapping out more cost-efficient alternatives for a few months.   <\/p>\n\n\n\n

4. Increase Your Income With A Side Hustle<\/h2>\n\n\n\n

Side hustles<\/a> are empowering. They allow you to earn extra money on your own terms. Using what you make to help pay down debt is a great way to control your financial future. However, earning more money through a side hustle can sometimes highlight poor spending habits.<\/p>\n\n\n\n

If a side hustle isn\u2019t right for you, and you are still overextended, it might be time to change jobs or find a career with more earning potential. Determine how much money you need to make to manage your expenses and research jobs in your field that will meet your needs. <\/p>\n\n\n\n

Getting out of debt often involves a lifestyle change, and deciding to make a career shift may seem extreme, but it can open up a world of possibilities. <\/p>\n\n\n\n

5. Negotiate With Your Lender For A Lower Interest Rate<\/h2>\n\n\n\n

Whether you are broke or not, talking to your lenders to negotiate better terms is always a good idea. However, you should do it the right way. Simply asking for a lower interest rate may not be the best approach. Instead, do your research and come prepared with information.<\/p>\n\n\n\n

You can improve your chances of getting a lower interest rate when:<\/p>\n\n\n\n