How To Get Out Of Debt With No Money And Bad Credit?

But what if we were to tell you that this far-off dream can become reality? Getting out of debt with no money and bad credit requires a good strategy, committed effort, persistence, and wise use of the financial tools at your disposal. With a little help and guidance, you could have the upper hand on the debt monster in as little as a year.

How To Get Out Of Debt With No Money And Bad Credit?

Trying to break out of the debt cycle can be made easier for people if they have a debt management plan. Most people struggle with paying off their debts as they don’t know where to start. Below are some tips and tricks to teach you how to get out of debt with no money and bad credit:

How Much Debt Do You Really Have?

People are sometimes too afraid to even sit down and calculate the actual debt they have. They try to do mental calculations and let’s face it, most of us are really bad at that. Doing calculations in your mind can confuse and overwhelm you. The first thing to do is take a deep breath, take out a pen and paper (or make a spreadsheet on your laptop), and start putting down each debt one-by-one. Note down your debt balance, the interest on it, the monthly amount you need to pay, and the available credit limit i=on each debt. It’s also a good idea to note down which of your debts carry a higher penalty and should be tackled first.

What’re Your Expenses?

Now that you know how big your debt monster is, it’s time to get to make your budget. Budgeting can be tough for people who do not have a steady income, so it’s better to start with your expenses. Where our income may not be in our hands, our expenses are generally the same month to month and we can be more in control of where we spend and how much we spend per month. Make a detailed list of the essential items you need to survive. These include your necessary groceries – so maybe skip out on that new, exotic recipe you saw on the travel channel – your bills, prescriptions, fuel and travel cost, and your necessary items of personal use. The keyword when making your budget is a necessity. Cut out each and every small thing that you can survive without. Your debt is a serious issue and you will need to make some hard choices to tackle it.

Make Your Budget

So now you have a clear picture of your debt and your expenses. The next thing to do is to start prioritizing. List out your debts and expenses from the most important and unavoidable down to the inessential ones. Now, start allocating your income using zero-sum budgeting techniques. A zero-sum budget means that after allocating your income to your savings, debt, and bills, you are not left with a single penny at the end of the month. If you have to cut expenses do so from your monthly spending, like entertainment, travel, and going out with friends. In terms of hierarchy, your debt takes the first spot, followed by your savings or safe investment, and at the very last are your monthly spendings.

Reduce Your Spending

As if people with debt already did not know that. The thing is, though you do want to reduce your spending, you don’t know how to do that. Or you are not sure if it really will help. Trust us when we say that every small penny helps. When you start being more mindful of where you are spending and how you are spending it, you start to have more and more money at your disposal. For instance, start making your own food instead of getting take-out every day. Take your own coffee to work instead of getting one on the way. It may seem like you’re saving only a few dollars every day but, accumulates over the entire month, it can make a significant impact. You can also unsubscribe from the gym and yoga and instead go for a run or workout at home. Use cheaper packages for your internet and phone service and have the cable removed. YOu can save money on traveling by doing your grocery run on your way from work, and buying in bulk. Get coupons for everything. Go to thrift stores use online services and marketplaces to get better deals on electronics, clothes, utensils, shoes, and even your toiletries.

Make More Than Your Minimum Payments

Now that you have cut on your monthly spendings and have extra cash available, you can use that to increase the monthly amount you are paying in debt per month. If you think you can get along by just making the minimum payment on your debt per month, you are in for a very long and uncomfortable ride. Even if you can add an extra $50 to your payment per month, that will help. And if you reduce your spending, you’ll be able to contribute more than that.

Take It One Debt At A Time

Now of course we know that it is difficult to make more than the minimum payment towards each debt every month. Pick one debt and start making more than the minimum payment on one of these debts. Keep doing so until that debt is paid off. Then pick another loan and start making more than the minimum towards that.

Let’s take an example. To keep things simple, let’s say you have five loans, each with a minimum payment of $100. You make the minimum payment of $100 towards four of these loans and towards the fifth one, you make $200 monthly payments until it is paid off. Then you take the rest of the four loans, making $100 towards the three of them and $300 towards the fourth one. In effect, you are going to be spending the same amount, $600 dollars towards your loan every month. You will not only be avoiding the interest from the fifth loan but will also have the comfort of knowing that you now have one less debt to deal with. According to a study by the Harvard Business Review, you can pay your debts 15 percent faster than if you used the $600 to pay the loans evenly every month.

Which loan should be paid first? You can start with the biggest loan and pay it off, thereby avoiding the most interest. Or you may start with the smallest loan and snowball your way up to the biggest one. For many people, this can be a better approach, as you get faster results. This helps you stay motivated, though you may be accruing a lot of interest in the meanwhile.

How To Get Out Of Debt On A Low Income?

Whether you are broke or have a low income, you can work on a plan to tackle your debts effectively. It can be very hard to manage and stick to a debt repayment plan with a low income and bad credit. However, with a little help, you can just about make your way back out of the debt puddle.

If you are having trouble following your plan, contact your bank. Let them know about your plight and your earnest efforts to pay off your debt. The bank wants you to stay as their client for the next 25 to 30 years. It will try to accommodate you and help you out as much as it can seeing your earnest efforts to pay off your debt. You may even get a debt consolidation loan from the bank. Make sure it has a lower interest rate than your current loans and that your loan term is such that it does not affect your current debt adversely. You can also ask your lender for a lower rate on your credit card. This is a common practise and if worse comes to worse, your lender will deny your request. If you have been making regular payments in the past, you will not have any trouble with your request.

To help you even further, find innovative ways to stay motivated and work aggressively on your debt relief.

Creative Ways To Pay Off Debt

Paying of debt can feel not only very monotonous, but also an overburdening and never ending responsibility. You need to get creative with your ideas and pay off the loan smartly, without letting it get to you. Once you have made your budget and have a clear picture infront of you, you can start working on it at your own pace.

Use Visuals

One can get caught up in numbers, interest rates and spreadsheets. To keep yourself from getting clouded, use visual aids. For instance, make a paper chain to represent each debt and its monthly payment. As you make the monthly, you remove the piece of paper that trepresents the payment from the chain, which can be oddly staisfying and immensely motivating.

Set Yourself A Monthly Challenge

Setting up a challenge is perhaps one of the best ways to stay focused. You couls start with something as basic as a food challenge and see how much you can save on food compared to a typical month. Or try to find engaging and uplifting activities to help you spend your free time without spending lot of your money.

Start A Side Gig

Do you like art? Or music? Or just have a ton of creative ideas but never found the motivation to do anything about them? Well now is the time to unleash your inner creativity and start a side gig! Not only will it help to get your mind off of the overburdening loans, it will also bring in a some extra cash to help you out. If you think you cannot take on a big project such as starting a business just yet, don;t fret. You can find people with similar interest and work on projects with them to get some expereince as well as make cash on the side.

Work With An Accountability Buddy

Just like people who are working on a diet,you can get together with a friendd and work on your debts together. Hold each other accountable about where, when and how you’re spending money. Do progress check-ins on each other to keep an eye on how far along your debts have come. You can also share tips and tricks on cheap buying and money saving techniques.

Ditch Your Credit Card

With a credit card in our hand, it is difficult to realize how much we are spending. Evrything seems important, not to metion ever so appealing with the iea that we can pay for it later. And soon enough, each small spending piles up as credit debt. When you;re paying with cash, it will be easier to keep an eye on where you’re spening and how much. We also tend to think twice about our purchase when we see tangible cash leaving our hands.

I’m In Debt And Need Money

A little extra cash cna go a long way when paying off your debt. You could contact your bank to give you a debt consolidation loan on easy term to help you pay off the debt. Or you can as kfriendsand family for a loan. Make sure you only borrow as much as you can pay off to keep your realtionships healthy, otherwise things can get very sour very fast. You can also contact a charity to help you with your debt payments. You may also be eligible for a grant to catch up with your debts. A grant is a gift, so unlike a debt consolidation loan, you will not have to pay it back to the grantor. Additionally, you may also start working part-time to get some money.

Grants To Help Get Out Of Debt

The government offers grants for certain categories of your expenses that can directly or indirectly help you with your loan payments. Go to benefits.gov to learn all about the benefits that you may qualify for.

Here we are listing some more resources for debt relief and grants to help get out of debt:

1. Catholic Charities
2. Jewish Federation Of North America
3. Lutheran Services In America
4. Net Wish
5. Saint Vincent de Paul
6. Salvation Army Family Emergency Services

When opting for a debt relief loan or grant, keep a careful eye out for scams. There are many heartless people that will try to take advantage of your situation. Make sure you verify any deals that are being offered to you and read all documents carefully before signing them.

How To Get Rid Of Debt Without Paying?

Unfortunately there is no shortcut to get rid of debt without paying. You need to make the required payments, but you may defer them until a later date. For instance, you may ask for forbearance or deferement of your loan. You can even request a lower interest rate from your loan servicer or bank. But you will have to pay the loan eventually. It is better to pay it as soon as possible instead of putting it off until later.