This post was submitted on behalf of PennyMindingMom.com.
Between student loans, mortgages, car loans, and credit cards, Americans carry a lot of debt. The latest statistics reveal the average debt for Millenials is almost $80,000, while generation X’s average debt is almost $136,000.
Are you struggling with debt? You’re not alone! Paying off your debt is important for maintaining a good credit rating.
Paying off your debt is also important for your peace of mind! If you’re broke, paying off debt may seem like a fantasy but it’s not.
Keep reading for how to pay off debt when you are broke.
Assess the Situation
When you’re struggling with a mountain of debt and the bills keep coming in, it’s tempting to hide your head in the sand. Are you afraid to look into your bank account?
It’s time to change your mindset. Sit down with all your financial information. Make a list of all your debts.
Analyze your income and spending. Why are you in debt? What are you spending money on?
Many people aren’t broke as much as they’re overspent. They spend money on non-essential items instead of paying down debt.
You’ll likely need to make sacrifices to get out of debt. Stop going out to dinner, let go of your expensive T.V. subscriptions. Stop over-buying at the grocery store.
Create a Budget
Here’s where you need a little tough love. List all your essential bills like:
- Transportation/car loan
- Health costs
- Credit card debt
- Student loans
Most people have high-interest credit-card loan debt, a mortgage, and student loans. The trick is paying off the high-interest loans or the highest-debt loan first. Create a budget and stick to it.
Always pay your bills on time to avoid additional interest and late fees.
Call Your Creditors
Decide which loans you’ll pay off first. Make some phone calls!
Do you have high-interest credit card debt? Call the credit card companies and ask for a lower interest rate. Tell them you’re working hard to pay off your bills and need some help.
Credit card companies entice customers by offering zero balance cards for a year. Tell your company you’ll transfer your balance if they can’t give you a better interest rate. Be courteous but firm.
Are you facing collections and have credit card debt and personal loans? Try a debt consolidation company like Debthunch. They’ll help you consolidate all your debts into one low-interest loan.
A Side Hustle
If possible, look for a side hustle or even a new, better-paying job. Making more money helps you get out of debt faster. It’s the best way to pay off debt when you’re broke.
If you find a side hustle you love, it may even become your main gig later.
Now You Know How to Pay off Debt When You Are Broke
Now you know how to pay off debt when you are broke! It’s not easy, but you can and should do it.
Assess your total situation, create a budget, and stick to your plan. Call your creditors and ask for a lower interest rate. Look for debt consolidation situations that work for your budget.
If you can, come up with a side hustle for extra funds. You’ve got this!
Looking for more great advice? Keep reading the blog!