By the end of 2018, US consumer debt had reached more than $4 trillion. That equates to more than $12,000 for every man, woman, and child in the country.
This is the first time that the collective debt has ever passed the $4 billion dollar mark. And the increase in debt is showing no sign of stopping.
Many of us are saddled with debt. It can become a vicious circle, with interest repayments eating up any spare money so that the debt never gets paid off. But there are steps you can take.
Read on to learn nine tips for how to get out of debt when you are broke.
1. Ask for a Raise
There are two ways to break out of the cycle of debt. Spend less, or earn more.
Your biggest source of income is almost always your job. So speak to your boss and see if there is any chance of a raise. They are under no obligation to give you one, but as Wayne Gretzky said, you miss 100% of the shots you don’t take.
Even a small raise can give you a little extra income which can help you to start paying off your debts.
2. Find a Side Line
If your boss won’t give you a raise, you may be able to make a little more money elsewhere.
There are a huge number of ways you can make extra income in your spare time. Consider ideas such as selling products online, completing paid surveys, or other work-from-home opportunities that you can fit in around your usual work.
The internet is full of advice about these kinds of jobs and the extra money could definitely help you to reduce your debts.
3. Consider Debt Relief
If you have significant amounts of debt, and you just can’t see any other way out, then you might consider debt relief.
Debt relief companies will negotiate with lenders to try to reduce the amount that they will be willing to accept to clear your debt. Some lenders will accept less than the full debt being repaid, as it is better for them to recoup some money than none at all.
You will usually then make just one monthly payment through the debt relief company who will handle your repayments for you. If you would like to know about what debt relief companies can offer then read more here.
4. Sell Unused Stuff
We buy a lot of stuff throughout our lives and many of us are loathe to throw any of it away.
So you probably have quite a few items in your home that you don’t really use that much, and that you could turn into cash. Items such as old smartphones, games consoles, even books and DVDs can be sold online, and help you to pay off some of your debt.
So take a look around your home and if you find things that you haven’t used for a few months, the chances are you probably don’t really need them.
5. Consolidate Your Debts
If you have a number of different sources of debt, you may be able to save money on your repayments.
It is very unlikely that your debts will all be at the same interest rates; some are more likely to be higher rates than others. So if you are able to consolidate your debts into one big loan at a slightly lower interest rate, your repayments will be less, meaning that you can pay them off more quickly.
6. Use a Budgeting App
Most of us end up in debt for a simple reason: we spend more than we earn.
And a large part of this is down to those small purchases that don’t seem that much on their own, but soon mount up when you add them all together. Using a budgeting app can help you to keep track of your spending and ensure that you only spend within your means.
Most let you set a spending limit each month for things such as rent, food, clothes, meals out and so on. You then keep track of what you spend in these areas, and once you’ve reached your limit you stop.
It sounds simple, but it can be remarkably effective.
The most expensive purchase that most of us ever make is our house.
And it’s also the place that we can find the biggest savings. If you’re struggling with debt, then it is worth considering downsizing your home. The extra money left over could help to clear your debts and your mortgage repayments should also be lower.
If you don’t own your own home, downsizing can still help to reduce what is likely to be your largest outgoing: your rent.
8. Lose the Expensive Hobbies
If you can’t earn any more money, trying cutting down on spending.
Take a look at your most expensive hobbies, as these will be where you can save the most money. Expensive gym membership? Consider working out at home using free weights, at least until you are back on your feet.
Addicted to coffee? Try making it at home at a fraction of the price of a trip to the local Starbucks. By cutting out these expenses you will free up a lot of cash to pay down debts.
9. Pay with Cash
If you’re really struggling to stop yourself spending, this is a great idea.
Modern technology has made it far too easy to spend a fortune from the comfort of your own couch. So try going old school. Ditch the cards and the online payments, and try paying in cold hard cash.
You will find that handing over a wad of notes makes you far more reluctant to spend than using a credit card or PayPal.
More Advice on How to Get out of Debt When You Are Broke
If you want to learn more about how to get out of debt when you are broke then you’re in the right place.
We have a wide range of articles on all aspects of money management. They cover everything from taking out loans and tracking expenses to great money saving tips. And we also have plenty more articles on other aspects of finance, as well as our money toolkit which is packed with useful resources.
Feel free to take a good look around.