With the right knowledge, habits, and resources at your disposal, you can learn how to get out of debt with no money in 2020.
The millennial generation is on track to become one of the most heavily indebted in history. As of late 2018, Millennials ages 25-34 have $42,000 in debt, and most of it isn’t from student loans, according to CNBC.
The reasons for this are numerous, including skyrocketing tuition fees, expensive housing, and a growing addiction to credit card debt among younger generations.
Here are 13 great ways for you to start getting out of debt and freeing yourself up from financial demands, starting today. how to get out of debt with no money
How to Get Out of Debt Faster
While millennials, as a whole, are typically saddled with more debt than the generations before them, there is nothing inevitable about a life controlled by debt. With the right knowledge, habits, and resources at your disposal, you can become totally debt-free within a short period of time.
1. Get a Grasp on the Numbers
The first step to eradicating your debt is to fully understand how much you owe and how you can feasibly pay it all back. You can use a number of calculators and online debt services to find out the full amount that you owe and how much you should be putting away each month to service your debt.
This first step is undoubtedly the scariest, as most people would rather keep their heads in the sand when it comes to their financial troubles. However, knowing the truth is the first step toward liberation.
2. Work Out Your Budget
The next step is to recalibrate your life in a way that frees up more cash for debt repayments. Prioritize your most urgent, high-interest debts and then figure out where you can trim your expenditures to service them.
Use a budget planning tool like the one offered by Mint and Personal Capital to reduce your utility bills wherever possible, before looking at any lifestyle changes you can afford to make. Simple steps like not eating lunch out will save you thousands every single year, so leave no stone unturned when looking for savings.
3. Save Wisely
This one might seem obvious, but most people never save the right way. First of all, simply squirreling away what you can into a separate bank account isn’t going to make your debts go anywhere.
Wise saving means making your money work for you, so explore low-risk investment options even if you have little money to spare. This will help boost your available capital without requiring any work from you. You can start investing even if you have little money to spare.
4. Maximize Your Income
Those on a fixed income may feel especially trapped by their debt, but this needn’t be the case. Explore avenues for maximizing your income as a way to service your debt.
This could be as simple as letting out a spare room, taking part in high paying survey sites, or doing some part-time freelancing work on top of your full-time job. There are countless ways to boost your income, so make sure to do some research and see which ones work for you.
5. Refinance Your Mortgage
You can also consolidate your various debts into one manageable system. One of the most popular ways to do this is to refinance your home.
Whether you want to lower your monthly mortgage payments, pay off your mortgage faster or get cash from your home, LendingTree’s marketplace will help you land the best deal for your refinance. You can also choose this method to reduce your existing mortgage payments by switching lenders and getting a lower rate and saving thousands.
Rather than visiting a financial advisor, homeowners can now use an online remortgage calculator from a platform such as Trussle to determine how best to go about this popular method of debt reduction.
6. Rinse and Repeat
Once you have your budget in control and your debt is slowing being paid off, don’t stop there! Keep pushing to and continue finding ways to pay off your debt fast.
Look for other ways to save like using money-saving apps and be sure to monitor your progress as you go. It’s always smart to make adjustments as you progress and start building your emergency fund.
7. Create an Emergency Fund
Too often as a society do we fall into the trap of being ill-prepared for unanticipated financial burdens. Out of necessity and desperation, we turn to credit cards and personal loans to cover the costs that we didn’t see coming. While credit cards and personal loans have their purposes, we have become overly dependent on them, and this dependence coupled with high-interest rates keep us bound to the mounting debt around us.
This is the main reason having an emergency fund is so important – to enable us to cover unforeseen expenses without accruing additional debt and without breaking the bank.
The get started, start building your emergency fund which should be three to six months’ worth of expenses. If that amount isn’t possible right now, aim for one months’ worth, which is still a good place to start.
8. Get Your Credit Score in Check
Debt can have a massive effect upon your credit score, which – if you didn’t know already – is your passport to borrowing further money in future. Mortgages, credit cards, you name it – your credit score shows companies how reliable you are at being able to pay the money back.
If you’re in debt and are worried about your credit score – and your ability to take on finance in future – it’s high time you undertook a solid, thorough credit report and discussed your options for healing that score.
One of the most effective ways to get out of debt with several creditors at once is – as many debt experts will tell you – to consolidate what you owe into one lump sum with a separate lender.
This can effectively lower interest rates, can ensure that debtors stop pursuing you, and may also help to heal your credit rating – though this isn’t guaranteed. Your best option, before you consider consolidation in any form, is to consult a debt advisor to discuss your options. Never be afraid to reach out for help.
10. Start Selling
Yes – believe it or not – one of the most effective ways to start breaking down debt – which carries very little risk – is to start looking at your existing assets and possessions, and to start thinking about cashing them in.
This may sound horrifying – but in the case of mounting debt, it may be an option you have to take. Consider selling apps, consignment shops or services such as eBay – where you can easily generate cash for your old, unused items – or even look at your bigger assets to sell on if the debt is mounting even faster. You can even learn how to make $2,000 fast in our recent post.
11. Stop All Credit Cards
Yes – some people can really make credit cards work for them – but you should only ever consider using them if you are going to be physically able to stand up to their monthly demands. There are many personal finance gurus who teach that you should cut up all your credit cards, close your credit card accounts, and live entirely on a cash-only basis.
Spreading and delaying costs is an attractive proposal – and it works for plenty of people – but if you don’t keep up to monthly payments, you’re going to be digging yourself an even bigger hole.
Do yourself a favor, especially if your credit score is taking a hit – get those cards paid off with a sensible plan as a priority – and cancel them.
12. Consider Freelancing
Another way around keeping up with debt is earning extra cash – it’s not always so easy if you’re working every hour you’re sent, but it’s now easier than ever before to get set up on a freelancing site to make extra money.
Can you design corporate logos? Proofread? Write content? Provide voiceover work? If you have a talent, you can market it online – and it’s often a breeze making up some handy extra cash in just a handful of hours. This may well be your ticket to debt easing sooner rather than later.
13. Budget, Budget, Budget
If you’re faced with hefty debts and are struggling to make ends meet – re-evaluate your budget. Learning how to get out of debt with no money is possible.
Redo your monthly or weekly budgeting and keep receipts. Look at areas where you could stand to cut down on costs.
Make changes to the purchases you make, if only temporarily. Unfortunately, getting out of debt often means making concessions – and the biggest concessions you may have to make right away will concern your existing spending habits.
The Bottom Line
Escaping debt is never an easy process, but it’s something that’s possible for everyone, regardless of their financial situation. Take these steps today to ensure you’re living debt-free as soon as possible. I hope you learned how to get out of debt with no money in this article, as we shared our top tips.
What are some strategies you have used to get out of debt quickly? Have you ever tried debt-crushing ideas on this list?