Paying Off Debt With No Money
There’s nothing like heading to work with a caramel macchiato in the cup holder every morning and having order-in with coworkers. The paycheck comes on Friday afternoon and then it’s heading out for a movie and dinner with the spouse. Life is good.
Wait a minute. The mail comes on Saturday and there are a stack of bills. The dual incomes don’t quite measure up to the total of the invoices as a whole. Adding it up again doesn’t change the outcome. The bills are mixed in with final notices and collection agency letters. How do you pay off debt with no money?
A lot of people in the country are finding themselves in this situation. The debt/income ratios are way out of sync. Folks are living outside of their means.
A good bit of what is happening is because the world has become a lot busier and no one has a lot of time to pay attention to spending. Then it just spirals out of control. What we do know is there’s no time to cook, eat out. There’s no time to pack a lunch, order something to eat in. There’s no time to make coffee in the morning, buy a latte. We need relief of the stressful week, go out for entertainment on Friday night, shopping on Saturday.
Combine that with a sudden illness or injury and there are unexpected medical bills added on top of all of the spending. When they start to arrive with the added expenditures, you realize you’re in far too deep. It’s time to do something quick. Where do you start?
HOW TO PAY OFF DEBT WITH NO INCOME
The very first thing that you as a person who has no money but a massive amount of debt needs to do is sit down and really calculate how much debt you really have compared to how much income you generate. Having it written down will give you a concrete image of exactly what you have to work with and how far you need to go.
Create a game plan of how you plan on attacking the debt. This is going to include making a very detailed budget. There are apps such as the Every Dollar App that will help you account for each penny spent. Make it as realistic as possible so that you have absolutely no difficulty sticking to it. Don’t try to go too fast. You may go off course feeling overwhelmed. Just try to get your head above water to where you are at least making more money than what is going out for expenses. Do a new budget every month because expenses will change each month as things get paid and debt changes.
First line of business, you need to do a list between what are needs and what are wants. Divide the list into those two categories. After you are able to do that. Then take the bills and eliminate any that you know are unnecessary expenses that can just be cut out.
These are a definite unnecessary expense. Cut them all up. Then call the credit card companies and explain your situation frankly. In almost every scenario, they are willing to work with you. They have credit counseling and debt settlement departments that help. They freeze late fees and penalties in certain situations and can roll everything into one monthly payment. They’re motivated to help you. That is mostly for just one reason, they are afraid otherwise they won’t get any money back from you. They cut their profit margins to get you back on your feet so that they can obtain some of their money back.
Set goals that are realistic. Line your bills up frome smallest to largest and attack the smallest with a vengeance while paying minimum on the biggest. Once you get a bill paid off, this will give you incentive to do the next one. It’ll inspire and motivate you. This will serve as encouragement for you to move on to more. Then the next time you’ll pay another one off and so on. Make it visual for yourself. Have it written down and as you pay something off cross it out with a bold marker. As you go, crossing them out will start to look really good.
Making a vision board will be tough because you won’t be able to see yourself getting through this at the moment. It is necessary to try to have a positive attitude, though, so this is important. Put all the things that you see yourself being capable of when you are free of all of the troubles you have right now. It’ll actually become a fun project and will give you something to look forward to.
If you don’t have enough money coming in, you need to bring more money in. First try to see if you can get a raise with your current employer. Then, you can make finding something to do fun by using a hobby or a passion that you may have to go and get another job. Task Rabbit offers gigs for people to do on the side and there are other apps like that where they have gigs for people who want to make extra money. You can find free things for sale on Facebook or Craigslist among other places that you could pick up and resale for 100% profit. Network — talk to friends, coworkers and let them know you have a particular skill. You never know, they may know someone who could benefit from the help.
If you don’t have a mortgage and are renting, try to get out of the lease and find a way to manage someone else’s assets via property management, a resident adviser or staying with someone who needs help around their home. There are folks who need live-ins in exchange for a place to stay all the time. The money you save in rent will go towards your debt.
Return the debt
Whatever you can take back, if it’s within the time limits, take it back and get your money back.
Electric / Water
Find ways to reduce these bills. Keep the lights turned off when not in use. If you can hang your laundry outside as opposed to using the dryer, do that. If you can turn the hot water heater off during the day when you’re not home, that could save a significant amount of money. Don’t take excessively long showers.
If you have two vehicle payments, sell a car and share
No eating out. If you want to celebrate paying off a bill and have a one-time experience, go to a restaurant and share an entree together and have water as your drink of choice. As far as groceries, there are no elaborate choices. If you need to eat beans or ramen noodles or rice, that is what you have. The money you save will pay off some debt. Drink water with a filter on the tap, skip the juices or sodas. They’re bad for you anyway. For work, pack a lunch to take with you. Make your coffee in the morning at home to carry in a tumbler instead of buying a $4 latte on the way to work.
If you don’t have any, hold off on getting any. We all love animals so much, but they are expensive to care for. It is truly like having a child if you care for them properly. If you’re in this kind of debt, this is definitely an expense that you can’t take on at this particular moment.
Let everyone know what is happening. This allows them the benefit of understanding why you’re unable to go out or do things that you normally were able to do before. They’ll know not to ask and respect what you’re trying to do.
If you’re really serious about getting yourself out of this massive debt, sell your things. If you have three televisions, you don’t need all of those. Look at all the stuff you’ve accumulated in your home, decide what you absolutely don’t need and don’t ever use and sell it. You can use a lot of different platforms to sell things e.g. Poshmark for clothing.
It was really easy to get yourself into the situation that you may be currently in. It takes a whole lot of work to get yourself back out. Some of these things are extreme but may be necessary. You’ll be so happy when you’re on the other side looking out.