We all have some debt. If you can quickly pay your monthly installments, you feel okay, but what about when you don’t have enough to pay each month? Then, you find yourself in a stressful mode, and it matters a lot for your financial situation and overall happiness in your life.

If you feel like you are in a position like this, you will need a concrete plan and goals to get out of debt.

how to get out of debt when you are broke

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Change your mindset on how to pay off debt when you are broke.

First, calm down and remove all the fears and apprehensions about money. Stress will take all the happiness out of your life, creating more tension. I think you will agree with me on this one that whatever we do, we do it for joy. So what is the reason for doing all the tasks in life if you cannot find happiness? 

Having debt is one of those things which will make you stressed deep inside, even if you don’t care about it. But, on the other hand, I can tell from personal experience that having debt on yourself takes the pleasure of living out of life.

For this, you need an action plan to combat your debt. I can say from personal experience that when you find yourself in this situation, you feel all the doors are closed, and you constantly find yourself in debt survival mode.

But this is not the way of life. I mean, we all are here to live a happy life. This can be possible by reducing the debt and not getting into more debt.

Change your mindset about debt

If you want to do anything, the most critical task is to change your mind. If you cannot believe something, you cannot achieve it.

So, instead of thinking of debt, start thinking of how you will feel when you are debt free.

A few things which will help in shifting your mindset are 

Make a commitment to yourself to pay off debt

Make a commitment not to get into more debt

Committing to yourself, you are accountable and can change your life.

Plan how you will pay off your debt

Debt elimination needs time,  patience, planning, and a determined mind. When you have created a plan, stick to it. Take a pen and paper ( I love to write everything on paper because I love the visuals), and write down each debt you have. Also, write down the interest rate you are paying for each type of debt.

There are two methods to attack debt,

  1. Debt avalanche
  2. Debt snowball

Both work well, but it depends on which type of debt elimination method you use.

Debt Avalanche: In this method, first, the debtor attacks the highest interest debt. First, all the minimum installments are paid on each debt. Then the remaining money is paid towards the highest interest rate debt. This saves you some money on the interest payments.

When one debt is paid off, then the debt with the second-highest interest rate is tackled.

Debt snowball: This method pays off the lowest debt first. Dave Ramsey recommends this method in his book, The  Total Money Makeover. It is a popular method of eliminating debt, as when you have paid one type of debt, it encourages you to pay off more and keeps you motivated.

It depends on which payment method you choose, and both work well.

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How to get out of debt when you are broke and don't know where to start

1. Assess your financial condition

The first thing to do while coming out of debt is to assess where you are now.

  • How much debt do you have?
  • How much are you paying in interest and
  • what is the principle, and how much debt are you accumulating each month
  • whether it is increasing or decreasing
  • How many different debts do you have

When you have a clear picture of the amount you owe to banking institutions, you will be better able to resolve your debt issue. Your next step should be to make a plan to control your debts, not get into more debt, and create a budget to free some money to make your repayments.

2. Set SMART financial  goals

As with anything else in life, you need SMART financial goals to pay off your debt.  As you know, SMART goals are Specific, Measurable, Achievable, Relevant, and Timely.

Specific: Always make particular goals, as generic goals are challenging to stick with. Be specific about the debt you want to pay off first. For example, you can say that you want to pay the debt on this particular credit card first.

Pay that one and then start with the next one. 

Measurable: ” What gets measured gets managed.” As in the above example, stick to the amount you want to pay monthly or weekly. Stick to it.

Achievable: Keep your goals achievable, and don’t burn yourself. If you are left with $200 at the end of the month, you cannot pay a debt of $5000 in 5 months.

Write down your goal according to the amount you can save at the end of the month.

Relevant: Relevancy of goals is essential and if you feel like paying off debt is not possible, generating more income could be a goal for you at this time, And then you may find that paying the debt is easy for you with increased income.

Timely: Your goals should have a time limit attached to them. If you want to pay off a particular credit card, write down the time you wish to pay the debt.

⭐Pro tip: Make goals and stick to them with a determined action plan

3. Create a budget

Creating an actionable budget and sticking to it can take a long way. With a Budget, you can track your spending and check where the money is going.

Choose the budgeting method that suits your financial condition or is easy for you to stick to. Keep it friendly and straightforward.

Budget the easy way and save money

The best way to budget is to start and stick to it. Here your focus should be to stick to a budget and save money. All methods work only if you stay true to the budget.

I know it is difficult, like weight loss programs and other good habits where we start with enthusiasm and lose track later.

Be patient and see the money grow. When you check your growing bank account, it will motivate you to save more money.

” Money grows on the tree of persistence. “

There are so many budgeting apps and tools in this digital world, but I still love to budget the old way with pen and paper.

✔ Traditional budgeting

✔ Reverse budgeting

How to pay off debt when you are broke

 ✔Balanced Money Formula

Balanced money formula is a budget planning framework outlined by Elizabeth Warren and Amelia Warren Tyagi in the book ‘ All your Worth. ‘  According to this formula,

                     50 % of your income should go to your needs

                    30% for your wants and no less than

                    20 % into savings

It will urge you to keep your needs and wants under control so that you will have at least 20% of your after-tax income to save.

Which budget system is for you?

Check out this post to know more

4. Track your spending

I know it is a bit difficult but believe me, if you find that you are not left with any money after budgeting, tracking your spending will give you a few dollars to spare for paying off your debt.

When you start writing down each purchase, you will get an idea of how much money you spend on your wants and needs.

While writing down your purchases, write down needs and wants in front of them. Next time, you will think before making a purchase. You can save some money by not wasting it on simply the things you want but don’t need. Keep your spending to a minimum and reduce or eliminate your spending on needs. ( You can take care of your wants afterward) As for the present, your goal is to eliminate your debt.

  • If you like to go for an outing: choose free places
  • If you want to drink loads of coffee: brew it at home
  • You want to eat new dishes: Start cooking at home (youtube can be your BFF)

How to track your spending to eliminate debt

5. Go for no spend week/month

Spending a week can free up some money to pay off your debt. For example, if I don’t go to the supermarket for a typical week, I can save almost 100 dollars a week.

It is not easy to skip groceries every week, but eliminating them every other week helps save some money. Some perishables, like milk, are necessary if you are not vegan.

I went for a no spend time on my clothes for almost two years. I had enough clothes I didn’t need to buy. I just kept strict with myself. It also saved me a lot, as I could use those clothes that otherwise remain in my wardrobe.

Here are some tips to make your No spend month a success. Read this and be inspired to  for a no spend month or week ( whatever suits your situation)

6. Cut your spending

Yes, my friend, cutting your spending is the real thing and, most important, if you are already on a tight budget and want to tackle your budget.)

But cutting your spending and using that money immediately to either save or pay a debt payment will save you big on debt repayment.

  • Cut your grocery spending.
  • Reduce outings and eat out instead; start eating home-cooked food
  • Eliminate paid entertainment ( there are so many free choices)
  • Please get rid of any unused subscriptions( believe me, it will save you a lot )
  • Cancel any travel for this year ( You may plan a beautiful trip next year)

Or you can try some simple and actionable tips to cut your spending here

7. Create an emergency fund

I know what you would be thinking, how on earth can I have an emergency fund when I am already broke? If you are in high debt, you need a cushion to save yourself from getting into more debt.

Start keeping a bit each week for your emergency fund, which will help you in genuine emergencies, and you don’t have to rely on loans and more debt in those situations.

Accordingly, start with $10/week in your emergency fund. It will add up at the end of the year. In the meantime, if you see that your condition improves, you can start adding more to your emergency fund.

How to create an emergency fund when you are on low income?

8. Negotiate better interest rates

Talk to financial institutions you are a customer with for any reduction in interest rates, as this could save you some money. Do your homework and give them a call and tell them that you think the interest rate you are paying is much higher than you should pay. Ask for a lower interest rate. If they refuse, talk to their managers or if nothing happens, ask for the reason.

If they tell you that your credit score is not good enough, you should try to improve it again. Or try after your situation improves after some time.

9. Consolidate your debt

This is also a good idea to reduce your debt. It will not eliminate your debt but will help you pay off your debt a bit quickly. For example, if you have three credit cards with debts of $7500, $5000, or $10,000, you have some obligation on all of them. On top of other repayments, you have to make three minimum payments at least. If you consolidate this debt, you have to make a single payment and have a bit lower interest rate.

We did this as we had two credit cards and consolidated our debt. Therefore, it was easy to pay back credit cards quickly as it was easy to tackle one task at a time. 

Fortunately, we raised our income which helped eliminate all this debt quickly. As of now, we only have a mortgage which will take some time to pay, but we are not in a very stressful situation anymore.

10. Start earning more to get out of debt when you are broke

How to make money $1000/month working from home

This is the most crucial step if you are in a very tight financial position. The Internet has made it possible to earn some money as a side hustle even if you don’t want to go out to work more.

Start doing surveys because it is effortless to make some money. And if you are on a tight budget, earning extra money gives you some money to make extra money. For example, I am building my emergency fund from the extra money I get from surveys.

  ⭐ Best apps and survey sites that pay for referring people.


Swagbucks is good for getting gift cards for shopping. You will get a $5 bonus only for signing up. You can also make money by watching videos and games with a Swag button on your phone or PC. It is a small task site where you can accumulate points for many small tasks. You can redeem your points for gift cards.

⭐ You can read my full review about the ways to make money with Swagbucks here


The most crucial part is making up your mind and sticking to your plans if you want to eliminate debt. Determination and perseverance make a big difference in your financial health. If you have more ideas on eliminating debt, I would love to hear from you.

If you want to start something which could give you a passive income in the coming years, start a blog

How to get out of debt when you are broke as hell. With planning and smart goals about your finances, you can easily come out of debt even with tight budget.
10 simple and actionable tips to come out of debt when you are broke as hell and want to debt free.

How to enjoy life when you don’t have enough money

10 things you are wasting your money on

How to grow your wealth by tracking your spending

These are some of the best tips I used to eliminate my debt. I hope this can help you. These tips are for informational purposes only. You may or may not benefit from these. I am not a financial adviser, so if your situation feels out of control, seek professional help.