How to Get Out of Debt When You Are Broke

 

To get out of debt when you are broke, start by fully understanding your financial situation—list all debts and income sources clearly. Create a realistic budget that prioritizes essentials and trims unnecessary spending. Use proven methods like the debt snowball, increase your income with side hustles, and negotiate with creditors to reduce payments, staying patient and consistent throughout the process.

Key Takeaways

• To get out of debt when broke, assess your finances honestly and create a strict, realistic budget.
• Prioritize debts using the debt snowball method for quick motivation and steady progress.
• Increase income with side hustles, freelance work, or selling unused items.
• Negotiate with creditors for lower interest rates or repayment plans.
• Avoid taking on new debt and cut unnecessary expenses immediately.
• Stay patient, committed, and track your progress to maintain momentum.

Introduction

There are few situations more daunting than trying to escape debt with no money to spare. Living paycheck to paycheck, constantly on edge and one unexpected expense away from financial collapse, is a reality many face. 

For those feeling this intense pressure, it may help to know they’re not alone.

According to the St. Louis Federal Reserve, the current savings rate in the U.S. is just 4.6%—nearly half the historical average of 8.44%. Meanwhile, consumer debt has soared to a staggering $1.079 trillion.

Even more troubling, data from the Philadelphia Federal Reserve reveals that over 10% of Americans are behind on their credit card payments, marking the highest delinquency rate in twelve years.

Still, learning how to get out of debt when you are broke is not only possible—it’s something others have done successfully.

Many have started with nothing and managed to turn their financial lives around by gaining knowledge, applying proven methods, and staying committed to the process.

Debt doesn't just affect finances; it takes a toll emotionally, mentally, and even physically.

The stress can be all-consuming. But taking control, even in small steps, can lead to a powerful sense of personal strength and clarity.

Anyone determined to overcome their situation can start today. The fact that someone is searching for solutions shows they're already moving in the right direction.

With the right tools, mindset, and consistent action, even the most difficult financial challenges can be overcome.

Evaluate Your Financial Position

Every meaningful journey begins with understanding the starting point, and escaping debt is no different. To figure out how to get out of debt when you are broke, the first crucial step is assessing your current financial standing with honesty and clarity.

This involves gathering every piece of financial information: all existing debts, including credit cards, medical bills, student loans, car loans, mortgages, and personal loans.

Organizing these debts in a way that works best—whether by balance size, interest rate, or minimum payment—can help establish a clear picture of where things stand.

Dennis Shirshikov, Head of Growth at gosummer.com and an adjunct economics professor at City University of New York, emphasizes the importance of starting with a comprehensive overview.

“For those with limited incomes, listing every balance, interest rate, and required payment lays the groundwork for prioritizing high-interest debts,” he explains.

“It may feel overwhelming, but committing even small amounts—like an extra $10 or $20 monthly—toward your highest-interest account can gain momentum. Every small win matters, and progress builds motivation.”

Once all debts are laid out, it’s time to document them. Whether on paper or in a spreadsheet, include the lender’s name, outstanding balance, interest rate, monthly payment, and any other relevant details.

While Microsoft Excel remains a trusted tool, many free budgeting platforms are available online. A quick search for “free budgeting tools” can offer simple, user-friendly options for those just getting started.

What’s most important at this stage is full transparency—especially with yourself. Accurately tracking all income sources and spending habits is key.

Understanding the real bottom line—how much, if anything, is left over at month’s end—is foundational to taking control.

According to Lyle Solomon, principal attorney at Oak View Law Group in North Auburn, California, “Many people find themselves in debt due to emergencies, poor spending choices, or a lack of financial knowledge. Recognizing the true cause of your debt and taking responsibility helps avoid repeating those mistakes.”

Adem Selita, CEO and co-founder of The Debt Relief Company, reinforces the need for a practical mindset. “When it comes to reducing debt without borrowing more, there are only a few core paths: increase your income, reduce your spending, or work with creditors to adjust repayment terms.”

Each of these strategies will be explored further in the steps ahead.

Prioritize Your Debts

Once debts are clearly organized, the next step is determining which ones to tackle first. Many struggling with limited income find themselves making payments based on urgency—whichever creditor is demanding attention that month.

Unfortunately, this scattergun approach rarely leads to long-term progress. Choosing a structured strategy is essential for staying focused on how to get out of debt when you are broke.

Two of the most widely recommended methods are known as the snowball method and the debt avalanche. Each offers a unique psychological and financial advantage.

The snowball method focuses on quick wins. By putting extra payments toward the debt with the smallest balance while maintaining minimum payments on the rest, individuals build momentum as each balance is eliminated.

Once a debt is cleared, the amount that was being paid is rolled into the next smallest balance, creating a compounding effect that drives motivation and progress.

In contrast, the debt avalanche method prioritizes interest savings. This approach directs additional payments toward the debt with the highest interest rate, regardless of the balance size.

Like the snowball method, all other debts remain current with minimum payments. Once the highest-interest debt is paid off, funds are redirected to the next highest-interest account, ultimately saving more money over time.

While the snowball offers faster psychological wins, the avalanche is generally more efficient financially. Neither approach is universally better—it all comes down to the debtor’s mindset and financial situation.

What's important is choosing the strategy that aligns best with personal habits and staying consistent.

It’s also essential to continue making at least the minimum payments on all accounts, even while focusing extra funds on a specific one.

Neglecting any account can result in fees, damage to credit, or further financial complications.

When deciding which method to follow, consider three key risks:

• High-interest debt that can rapidly snowball if left unchecked
• Creditors known for severe penalties or harsh late fees
• Accounts nearing default or already in a critical state

Successfully applying either method also requires a willingness to accept lifestyle changes.

Getting out of debt on a low income demands setting realistic goals, avoiding unnecessary expenses, and being fully honest about what’s sustainable.

Without a clear and grounded commitment, even the most proven strategies may fall short.

Build a Budget That Works for You

Getting out of debt when you are broke requires a solid financial roadmap. A well-crafted budget—one that’s realistic, flexible, and sustainable—serves as the foundation for your journey. Without it, staying on course becomes nearly impossible.

When income is limited but the determination to pay down debt remains strong, the first critical step is distinguishing between needs and wants.

Embracing this mindset shift is essential. Basic necessities like housing, food, transportation, utilities, insurance, and taxes take priority. Still, even within these categories, there’s often room to scale back.

Downsizing to a more affordable living space, choosing generic grocery brands, switching to public transit, or revisiting insurance plans can all help reduce expenses.

Sometimes, what feels like a need is really a disguised want—recognizing that difference can free up valuable funds for debt repayment.

Then there are the more obvious cuts—areas where spending can be trimmed immediately with just a bit of discipline.

Daily coffee runs, takeout meals, unused subscriptions, premium streaming services, mobile add-ons, impulse buys, or indulgent memberships often drain money without adding lasting value. These should be the first to go.

Tracking every dollar is key. Whether it’s through a handwritten expense journal or a budgeting app, consistent tracking makes it easier to spot problem areas.

Andre M. Aran, managing partner at Regency Wealth Management in Jupiter, Florida, advises people to “record daily expenses for two weeks and review what is discretionary and what is essential.”

Identifying and eliminating these "money leaks" helps reroute funds to where they matter most—toward paying off debt.

Importantly, any budgeting method used must suit the individual’s lifestyle. It needs to be practical and something they can commit to long-term, ideally over a period of several years.

As Dennis Shirshikov notes, “Debt reduction isn’t instant; it’s a marathon.” Recognizing small milestones—like clearing 25% of a debt—can fuel motivation.

When the process feels slow, it helps to visualize the freedom that comes with being debt-free and to stay connected to the reasons behind the decision to change.

A budget isn’t just numbers on a page—it’s a tool for transformation. When used consistently and honestly, it becomes one of the most powerful ways to gain financial control.

Pay Off Debt Using the Debt Snowball Method

Once a budget is established, it’s time to take action: start paying off the debt.

One of the most effective strategies, regardless of income level, is the debt snowball method. The process works like this:

• Begin by listing all debts from the smallest balance to the largest, regardless of interest rates.
• Make minimum payments on every debt except the smallest one.
• Focus all extra available funds on paying off the smallest debt as quickly as possible.
• After clearing the smallest debt, redirect all the money that was going toward it to the next smallest balance.
• Continue this cycle until every debt is fully paid off.

Why put interest rates aside for now? The answer lies in the need for quick victories. Eliminating the smallest debt first provides a boost of motivation. Applying that freed-up payment to the next debt builds momentum. Motivation combined with momentum leads to success.

This approach resembles a snowball rolling downhill, gaining size and speed as each debt is eliminated.

Increase Your Income Through Side Hustles, Freelancing, and More

When figuring out how to get out of debt when you are broke, boosting income can be a game-changer.

Even modest earnings from a side hustle or freelance gig can accelerate debt repayment and create a sense of forward momentum. Injecting some creativity and initiative into the process can bring both financial and personal rewards.

Start by evaluating your current job. Are your wages aligned with your experience and skill level? Are others in your role earning more—either within your company or elsewhere in your industry? If so, gather the facts, build a strong case for why you deserve higher pay, and approach your employer with confidence.

But don’t stop there. The modern gig economy offers an incredible range of opportunities to earn extra cash on your own schedule.

Chances are, others in your community are already supplementing their income through flexible work—delivering food, pet sitting, assembling furniture, or even standing in line for events.

Not sure what fits your lifestyle? Search online for “side hustles near me” to explore local or remote possibilities.

Those with underused professional skills should consider the freelance market. While writing and editing remain classic freelance paths, there's also strong demand for web developers, graphic designers, marketers, social media managers, tutors, and photographers.

Thanks to today’s digital landscape, anyone with a computer and an internet connection can potentially land contract work from anywhere.

Individuals with a talent for making things might explore selling handmade products. Others may prefer traditional part-time roles at local businesses.

And for anyone holding on to unused items—clothing, electronics, furniture—selling through platforms like eBay, Facebook Marketplace, Craigslist, or consignment shops can provide quick cash to put toward debt.

This is a prime time to embrace a more entrepreneurial mindset. For those living paycheck to paycheck, exploring creative income streams isn’t just smart—it can be the key to regaining financial control and climbing out of debt faster.

Negotiate With Creditors

For those struggling to stay afloat financially, reaching out to creditors can be a highly effective—yet often overlooked—strategy when exploring how to get out of debt when you are broke.

With the right approach, it’s possible to lower interest rates, adjust repayment terms, or even settle debts for less than the full amount owed.

According to Josh Katz, founder of Universal Tax Professionals in Beachwood, Ohio, “Negotiating with creditors is often achievable and can make a significant difference. Begin by calling and explaining your situation clearly. Ask whether interest rates can be reduced or if any fees can be waived.”

Creditors are sometimes willing to offer hardship plans, especially to borrowers with a previously consistent payment history.

These temporary arrangements may include lower monthly payments or paused interest accrual. 

When making contact, it’s important to remain professional and express a genuine commitment to resolving the debt. Creditors tend to be more cooperative when they sense a debtor is proactive and sincere about finding a workable solution.

Interestingly, those who have fallen behind on payments may actually have more leverage.

If an account is delinquent or close to default, creditors may be more open to restructuring terms or even accepting a lump-sum settlement for less than the original balance. 

It’s helpful to create a repayment proposal based on actual income and expenses—one that reflects what can realistically be paid each month. Presenting this during negotiations shows preparedness and a serious intent to resolve the issue.

Open communication is a powerful tool, particularly when financial resources are limited. If direct negotiation feels intimidating or confusing, debt counseling services can help.

Reputable agencies offer professional negotiators who can work with creditors on behalf of the borrower, often achieving more favorable terms than individuals might secure on their own.

When trying to negotiate, keep these tips in mind:

• Be honest and specific about your financial hardship
• Request lower interest rates or waived late fees
• Ask if a hardship plan is available
• Offer a realistic repayment amount or schedule
• Get any new agreement in writing before making payments

In tight financial times, taking the initiative to negotiate can relieve pressure and open the door to faster debt reduction.

Consider Debt Relief Programs

For individuals searching for realistic ways to get out of debt when they are broke, exploring debt relief programs can offer much-needed structure and support.

The debt relief industry encompasses several approaches, including credit counseling, debt management plans, and debt settlement, each with its own level of risk and commitment.

Credit counseling is often a sensible place to begin. Reputable agencies employ certified professionals who offer personalized guidance on budgeting, managing income, and repaying debt.

These counselors may also provide access to educational resources, financial workshops, and practical tools for long-term money management.

After reviewing a client’s full financial picture, a credit counselor might suggest enrolling in a debt management plan—particularly for those overwhelmed by unsecured debt such as credit cards, medical bills, or certain types of loans.

If enrolled, the counselor works with creditors to negotiate lower interest rates or waived fees and helps create a structured repayment schedule.

The individual then makes a single monthly payment to the agency, which distributes the funds to creditors based on the agreement.

These programs typically run between 36 and 48 months, and upon successful completion, participants are often free of unsecured debt.

While the plan requires consistency and discipline, it provides a clear path forward without the damaging consequences of more aggressive options.

Debt settlement, by contrast, involves significantly higher risk. This approach usually relies on a for-profit company negotiating with creditors to settle debts for less than the full amount owed.

During this process, clients are advised to stop making payments to creditors and instead deposit money into a designated account, building up funds for a potential settlement offer as well as the company’s fees.

This tactic can lead to increased interest charges, additional fees, and severe harm to credit scores.

Moreover, there’s no guarantee that all—or even any—debts will be successfully resolved, making this the most unpredictable and damaging option if it fails.

Among these choices, credit counseling remains the least risky. Clients are not obligated to accept any recommendations, and there’s no pressure to buy financial products.

As Dennis Shirshikov notes, “Outside coaching or working with a debt counselor can be a transformative step, especially when financial challenges seem insurmountable. Nonprofit professionals offer structure, tools, and creditor negotiation support without a sales pitch.”

Debt management and settlement strategies should only be considered when financial pressure is extreme and warning signs like missed payments are already evident.

Ultimately, anyone facing serious financial hardship should carefully evaluate each option, keeping in mind their goals, timeline, and tolerance for risk.

Avoid Taking on New Debt

At this critical stage of getting out of debt when broke, it is essential to halt the accumulation of new debt. With very few exceptions, opening new credit card accounts to pay off existing balances only shifts the problem—essentially “robbing Peter to pay Paul” in modern terms.

When credit card offers arrive promising low introductory rates or reapproval incentives, caution and careful strategy are paramount. Having maxed-out credit cards is the worst possible justification for increasing one’s credit line.

This moment also calls for a firm recommitment to eliminating unnecessary spending, as previously emphasized.

The only scenario in which accepting a new credit card might be reasonable is if it offers a balance transfer with a low fee and an extended 0% introductory interest period—ideally 18 months or longer.

To reduce temptation, cutting up current cards, unsubscribing from promotional emails, and enforcing strict no-new-borrowing rules can help immensely. The most effective policy is simple: no new borrowing.

Taking on new debt while trying to repay existing balances is like trying to fill a hole with the dirt you just dug out. Instead, put the shovel down.

Break the cycle of overspending and debt by switching to debit cards or cash-only payments, ensuring spending stays within available means.

Stay Committed and Be Patient

Overwhelming debt rarely happens overnight; it often accumulates gradually, one expense at a time. Likewise, the path to financial freedom is a gradual journey.

“There’s no quick fix,” explains Adem Selita, CEO of The Debt Relief Company. “Patience and dedication are essential when tackling debt. You didn’t fall into debt suddenly, so expecting to get out quickly is unrealistic. This process demands time and steady changes. By optimizing your budget and trimming expenses wherever possible, you can direct any extra cash toward debt repayment, which, in turn, reduces monthly obligations.”

Accountability is crucial. Individuals should hold themselves responsible and seek support from family or friends to stay on track.

There will be moments when the process feels slow, exhausting, and overwhelming. These challenges will test patience and determination. However, setting SMART goals—specific, measurable, achievable, relevant, and time-bound—can make it easier to remain focused.

Celebrating small wins is important. Whether tracking progress on a spreadsheet or app, seeing debts decrease visually provides motivation. Hitting milestones, like paying off the smallest balance, deserves recognition. Even a small treat, like enjoying a pizza, can reinforce positive habits.

Paying down debt while living on a tight budget can be a slow and demanding experience, but the reward is financial relief and reduced stress.

Why Our Digital Habit Tracker Is a Game-Changer

Staying consistent and motivated is crucial when working to get out of debt, and that’s where a habit tracker can make all the difference.

The digital habit tracker available at DigyKeys is designed to help users build positive financial habits by tracking daily actions, visualizing progress, and celebrating small wins.

Its intuitive design keeps users engaged without overwhelming them, making it easier to maintain commitment over time.

By using this tool, anyone can stay organized, hold themselves accountable, and turn gradual changes into lasting financial freedom.

Conclusion - How to Get Out of Debt When You Are Broke

In conclusion, overcoming debt while living on a tight budget is undeniably challenging but entirely achievable with the right approach.

By honestly assessing finances, prioritizing debts, creating a realistic budget, and employing proven strategies like the debt snowball method, anyone can steadily regain control.

Supplementing income, negotiating with creditors, and avoiding new debt are equally important steps on this journey.

Most importantly, staying patient, committed, and celebrating progress—no matter how small—builds the momentum needed for lasting financial freedom.

With determination and the right tools, a debt-free future is within reach.

Thanks for reading,

The DigyKeys Team

Frequently Asked Questions (FAQs)

How can I pay off my debt if I have no money?

Paying off debt with no money requires a strategic approach focused on budgeting, prioritizing debts, and finding ways to increase income through side hustles or freelancing. Using the debt snowball method can help create quick wins by paying off smaller debts first, which builds motivation. It’s also important to negotiate with creditors for lower interest rates or repayment plans to ease financial pressure.

How to get out of debt when you are poor?

Getting out of debt when poor starts with understanding your financial situation and creating a strict budget that prioritizes essential expenses. Implementing proven debt repayment strategies like the debt snowball method, while cutting unnecessary spending, accelerates progress. Increasing income through part-time jobs or selling unused items can provide extra funds to reduce debt faster.

How do I pay off debt if I live paycheck to paycheck?

Paying off debt while living paycheck to paycheck requires diligent expense tracking and cutting non-essential costs to free up money for debt payments. Applying the debt snowball method helps by focusing on eliminating smaller debts first, generating momentum and motivation. Additionally, seeking extra income opportunities such as freelancing or side gigs can provide the additional cash needed.

How can I clear my debt without money?

Clearing debt without money involves negotiating with creditors for hardship programs, lower interest rates, or extended payment plans to reduce monthly obligations. Focusing on budgeting, cutting expenses, and finding creative income streams can gradually build the funds necessary to pay off debts. Using structured repayment methods like the debt snowball can help keep motivation high throughout the process.

How to get out of debt when broke?

Getting out of debt when broke starts by assessing your full financial picture and creating a realistic, strict budget to control spending. Utilizing the debt snowball method to pay off smaller balances first can build momentum and motivation for long-term success. Supplementing income with side hustles or freelance work also accelerates debt repayment.

What are the 5 C's of debt?

The 5 C's of debt are Character, Capacity, Capital, Collateral, and Conditions, which lenders evaluate to assess creditworthiness. Character refers to a borrower’s reputation and reliability, while Capacity is their ability to repay debt based on income. Capital represents the borrower’s assets, Collateral is security for the loan, and Conditions relate to the loan purpose and economic environment.

What happens if I never pay off a debt?

If you never pay off a debt, it can lead to increasing interest, late fees, and a damaged credit score, making future borrowing more difficult. Creditors may take legal action, including wage garnishment or property liens, to recover owed money. Prolonged non-payment also causes financial stress and limits your ability to access essential services or credit.

What are the signs of financial trouble?

Signs of financial trouble include consistently missing payments, relying on credit cards for essentials, and a lack of emergency savings. Increasing debt balances and frequent calls or notices from creditors also indicate financial strain. Recognizing these signs early is critical to taking action and preventing deeper debt problems.

What is the fastest way to erase debt?

The fastest way to erase debt is by using the debt avalanche method, which targets paying off the highest interest debts first to minimize interest costs. Pairing this with a strict budget and additional income sources speeds up repayment. Alternatively, the debt snowball method provides motivation by paying off smaller debts quickly.

How do I wipe out all my debt?

To wipe out all debt, start by listing every debt and prioritizing payments using methods like the debt snowball or debt avalanche. Cut unnecessary expenses and allocate extra funds toward debt repayment consistently. Combining disciplined budgeting with increased income and creditor negotiations will help eliminate debt faster.

How to get debt removed without paying?

Getting debt removed without paying is rare and typically involves negotiating settlements with creditors or using debt relief programs. In some cases, disputing errors on credit reports or filing for bankruptcy may remove debts legally. However, these options can have long-term credit consequences and should be considered carefully.

What if I can't afford to pay the debt?

If you can’t afford to pay your debt, contact your creditors to discuss hardship programs or modified payment plans that reduce monthly amounts. Seeking help from credit counseling agencies can provide professional guidance and debt management solutions. Avoid ignoring the problem, as proactive communication helps prevent further financial damage.

What is the fastest way to pay off debt?

The fastest way to pay off debt combines a strict budget, the debt avalanche method to reduce interest costs, and boosting income through side jobs or freelance work. Making extra payments whenever possible significantly cuts down repayment time. Staying motivated by tracking progress and celebrating milestones ensures ongoing commitment.

What is a person who has no money to pay off his debt?

A person who has no money to pay off debt is often described as financially distressed or broke, struggling to meet basic expenses and debt obligations. This situation requires urgent financial planning, budgeting, and seeking support through debt counseling or income-boosting strategies. Addressing the issue early can prevent worsening credit damage and legal consequences.

Does the snowball method really work?

Yes, the debt snowball method really works by focusing on paying off the smallest debts first to create quick wins and build momentum. This psychological boost motivates individuals to stay committed and tackle larger debts over time. While it may not save the most on interest, the method’s focus on motivation often leads to successful debt elimination.

Written by DigyKeys Editorial Team
The DigyKeys Editorial Team is a dedicated group of writers, researchers, and digital experts who provide insightful content and resources to help you navigate the digital world. From personal development tips to creative strategies, we deliver practical advice and tools to enhance your productivity and achieve your goals.

Updated July 2025