Taking control of your finances doesn’t have to be scary. With a little help you can spend smarter, earn more, and build a more secure future every day.

Getting out of debt isn’t easy for anyone, but it’s an even tougher feat for someone who doesn’t have much money to spare. You can pay off debt when you’re broke, but not without making some financial changes first.

1. Create a budget if you don’t already have one. A budget will help you make better decisions about your money and give you an idea of how much you can afford to put toward your debt each month.

2. Make the distinction between broke and overspent. Are you using “broke” to describe what happens after you’ve spent all your money on non-bills and non-essentials? If so, you’re not really broke. You can make some changes to how you spend to create some extra room in your budget.

3. Put together a plan. Paying off your debt should always start with a plan, no matter how much money you have and even if you can’t start paying on your debt right away. Start by listing your debts along with the balance and interest rate. Prioritize your accounts, noting the order you want to pay them off, e.g. highest interest rate debt first, lowest balance first, or another order.

4. Stop creating debt. Cut up your credit cards and don’t apply for any more loans so you don’t have the ability to create additional debt.

5. Look for ways to cut your expenses. Don’t guess about it. Review your monthly bank statements to see what you’re spending money on each month. For each purchase, ask yourself seriously whether this is an expense to get rid of. Remember, you’re not cutting costs just for no reason at all. You’re doing it so you can get out of debt. It’s a worthy goal. You may have to make some temporary sacrifices, but you can add expenses back after you’re debt-free if you decide those expenses are worth it.

6. Pay on time and avoid fees. Late payments slow down your debt pay off progress. You’ll have to double up on payments next month plus pay a late fee — money that could have reduced your balance. Plus, two late credit card payments in a row will trigger the penalty rate, which will also make it tougher to pay down your debt.

Take it one step at a time. Looking at your total debt picture can be overwhelming, but remember that you’re not going to tackle it all at once. By concentrating on one debt at a time, your debt repayment is more effective. Track your progress, celebrate your successes, and keep chipping away until your debt is completely paid off.

Take control of your financial future now. Budgeting will prepare you for when you will need money management the most. Sign up for the Budgeting Made Simple email course today.


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