Trying to pay off debt when you’re on a shoestring budget can feel like an impossible goal. Aside from the basics like rent, groceries and gas, there are always unexpected expenses (think medical bill or car repair cost) threatening to set you further back. For those struggling with getting out of debt, staying on top of it all comes with a unique set of problems. 

Below are 10 of the most common obstacles to paying off debt:

• Figuring out how you got into debt in the first place
• Changing your debt attitude
• How to handle calls from collection agencies
• Making a debt plan
• How to decide which debt to pay off first
• What to do if you hate living on a budget
• Getting out of debt with no money
• Learning how to save money (Even if you struggle)
• Avoiding debt in the future

Let’s get started!

Getting out of Debt? Tackle These Common Problems

Problem #1 – “I don’t know how I got here.”

Trust me, I know how scary it is to confront your bad financial behavior. You wouldn’t want to confront any activity in which you did something wrong. Fortunately, debt can be repaid. Unfortunately, debt can only be repaid once you’ve gotten clear on your numbers, create a plan of attack for repayment, and studied how you’ll avoid getting into debt in the future. It sucks. Truly. But taking a look at the damage is both the first step and the hardest one when it comes to figuring out how to solve your debt problems.

It gets a lot easier from here. I promise.

The first step to getting out of debt when you have no money is to make sure the money you do have is being spent wisely. Here’s more information from Debt.com about how to get out of debt (especially when you’re living paycheck to paycheck.)

Solution #1 – Track your spending to see where your money goes

Start by assessing how you got into this situation. This begins with understanding where your money is actually going every month. It’s not something you should try to estimate in your head. As an added bonus, by identifying expenses you don’t need, you’ll be able to quickly find ways to save money each month, too.

Put on your detective hat and strap in. In order to find out how you got into debt, you’ll need to dig through a few months of spending.

• Take a look back at your last three months of spending. You may be surprised at what you find. Perhaps you spent $150 on clothes or close to $200 eating out at restaurants. It can be surprising to see how quickly little purchases add up.

• Considering signing up to use budgeting software like Mint.com to help you understand your spending habits and create goals for the future.

• Consider a cash-only lifestyle for a month to hold yourself accountable.

Problem #2 – “Getting out of debt is hard and I won’t be able to do it.” (the defeatist attitude)

Are you depressed about your debt?  Depending on how bad the situation is, this is only normal. While it might not seem like a debt solution, you’ve got to change that attitude first.  Getting out of debt is hard work, and while it’s natural to have a wide range of feelings about debt, those emotions aren’t the most helpful guides. Below are some examples of things to try to change your attitude around your debt. 

Solution #2 – The “quick win”

Paying off debt is a marathon, not a sprint. A great way to stay motivated and kick off the journey is to knock out a “quick win” and sell something you don’t use any more for some fast cash. I like to sell items like electronics and home decor on ebay and my clothing items via thredUP or Poshmark. You can also consign any designer items with TheRealReal. 

Here are a few other ways to stay motivated when you’re trying to figure out how to manage debt problems:

• These next steps take some guts.  So remind yourself of your fantastic qualities.  Seriously, make a list. You are not your debt.

• Start by considering what life without debt looks like (a vision board is a great exercise for this!).  It doesn’t have to mean an elaborate vacation.  It can be as simple as getting the mail without that sinking feeling that it’s full of bills.

Problem #3 – “I’m starting to receive calls from collection agencies.”

Meanwhile, are collection agencies calling you day and night?  Then hang tight to that positive attitude.  These people receive training to use words that manipulate you.   According to the Federal Trade Commission, collection agencies must abide by these laws.   Collection callers may not:

• Call before 8:00 a.m. or after 9 p.m.
• Call your place of employment once asked to stop (Send a certified letter.)
• Harass you or lie to collect the debt

Solution #3: Create a debt plan

• Don’t avoid creditors – this only makes things worse and compounds your anxiety.
• When learning how to manage debt problems, ask creditors to mail a “validation notice” with all the information about what you owe.  
• Once you have that information, take control of the situation and create a debt master plan that details how you’ll pay off the debt, how much you’ll pay each month, and when you plan to finish paying it off. 

Problem #4 – “I don’t even know where to begin or how to manage my debt problems on my own” 

The easiest place is to start by making a list of all your debts including credit cards and loans along with the current balance and interest rate for each account. Easy, right? (A little bit of wine makes this a much easier process, I promise.)

Step #2 is to look at your budget, and make a plan stating what you can pay and how often.   

Here are a few other things to keep in mind.

• If you’re dealing with collection agencies, call them and share your plan with them.
• Get the company to agree to your terms and put it into writing.  
• You may need to negotiate, but never agree to send more than you can afford.  
• Ask for a copy of the agreement. Without that agreement in place, companies can still sue you.  (Yes, even if you are sending regular payments.)  So do your best to negotiate with them.

• If this makes you nervous, you can work with a debt management company to negotiate with creditors on your behalf.

Tallying up all the debt you owe may seem overwhelming.  But it’s important to know what you’re up against.

Problem #5 – “I’m too hung up on which debt to pay off first! I can’t decide!”

Once you have your list of debts, choose one to focus on first.

• Some say to start with the smallest debt for a quick win.

•  Others say to knock out the one with the highest interest rate.

But I suggest choosing the one with the biggest motivating factor for you.  If you owe money to family and wish you could enjoy Thanksgiving pie in peace again, start there.  If one credit card is such a nuisance that you’ve nicknamed it “the Soul Sucking Scumbag”, you’ll want to put that first.

Solution #5 – Pay off  the smallest balance first

There’s a reason many personal finance experts recommend paying the smallest debt balance first, (vs. the one that you hate the most or the one that charges the most interest, it’s because it just feels good to take these out one by one. Psychologically, you’re much more likely to stick with something you feel successful at than when you feel like you’re failing.

Also, it’s important to focus on one debt while you tread water with the others. Your brain is more likely to accept this new habit.

Problem #6 – “I hate living on a budget.”

Uhm, yeah…me too. It sucks.

Remember: if you want a big result, you’ve got to make a big change.  

• Can you take on a part-time job for a while?
•  Consider downsizing your home or car.  
• Do you have big items you can sell? 

I know how much you love those things, but do you love them more than the peace of debt freedom?  Only you can decide that.  Remember, you can replace things.  And buying a new one will feel sweeter with cash. Here are five easy things to cut when paying off debt.

Solution #6 – Lower your fixed costs

To learn how to get out of debt, you’ll need to cut back on “fun stuff” (Postmates, shopping, Starbucks) AND your fixed living expenses (rent, bills, gas, groceries etc.) It’s way more fun to negotiate bills you have to pay anyway than cutting out lattes.

• While it’s easy to complain about a tight budget, the truth is most of us have something we could cut which is why I always recommend a bill audit.
• Start by canceling any services you don’t need, such as a music subscription service or online storage platform (think Dropbox).
• Next, review your fixed expenses. (Here’s our tutorial on how to do this.)

If you’re able to reduce your monthly expenses even a little, make sure to use the extra money to pay off debt. Set up an automatic transfer to your credit card or loan account to avoid the temptation to spend extra cash.

Problem #7 – “How do I solve debt problems when I don’t have any money at all?”

You can’t, really. You can consolidate your balances (see how to do this with Payoff here) which can lower your interest rates and your monthly payment, but you’ll still have to pay the debts each month to remain in good standing. Yes, that takes real money. This is why I emphasize earning extra cash via side hustles so much. It’s the key to any successful debt payoff strategy.

If you’ve reviewed your budget in depth and find you aren’t able to lower your monthly spending enough, consider increasing your income. They’re many different ways to earn extra money outside of your 9 to 5 job. (See our Pinterest board or Side Hustle category for more ideas on how to do this!)

Solution #7 – Earn more

Below are also 41 ways to make extra money I literally just listed off the top of my head. Money is a renewable resource, you can make more of it…you just might have to get creative and sacrifice some free time.

• Gig economy jobs that pay $1,000+ per month. 
• 10 side hustles for even the busiest people
•  create your own blog 
• take surveys (these are our favorite survey sites)
• 12 ways to make money in your sleep

• 9 apps that EARN extra money for users

Problem #8 – “I feel like I can’t talk to anyone about my debt problems.”

• Few of us can handle getting out of debt on our own.
• Kick off your debt plan by finding people whose money management style you admire.  Read books, listen to podcasts, and subscribe to blogs that inspire you to pay down debt.  
• Changing the way you think about money doesn’t happen overnight.  But catching an “aha” moment from someone who’s been there might be just the inspiration you need. (Read my debt story on how I paid off $8,000 in 90 Days here.)

Problem #9 – “I can barely save money, let alone get out of debt”

What is the recommended amount to save each month? About 20% of your take-home pay, if you’re using the 50-30-20 budgeting method.

So if you make 2200.00 per month after taxes, that’s 440.00 you should put away toward debt repayment AND savings. You should adjust this if you live at home to probably around 40 or 50% since you have no living or “fixed” expenses.

So how do you get to that 20% number if you’ve never really been good at saving? Automatic savings apps. (Here’s 11 that we like!)

Solution #9 – Digit

Here’s how Digit (and other apps that are similar) work. You connect the app with your primary checking account (the one you do all of your saving out of.) Then technology analyzes your spending to determine small amounts it can save for you (automatically) so that you don’t feel it. We’re talking anywhere from .53 cents to 3.00 each time. (Or more, it depends on if you make a lot of large expenses!)

After a month, all those small bits can add up to something really great.

Honestly, I never really liked saving or saw the magic in how “every little bit helps” until I got acquainted with the technology. For those who have trouble, let the apps do the heavy lifting for you and see how much you can save.

Problem #10 – “I don’t know how to stay out of debt in the future.”

Once you’ve got a handle on your current debt, you need to commit to not taking on new debt in order to break the cycle. This is definitely easier said than done. But a nice way to start is removing your credit cards from your wallet so they aren’t accessible. the next think I like to recommend is to promise yourself in the future you’ll wait 24 hours before buying anything online or anything that is outside of your budget. Honestly, half of the battle of staying out of debt is limiting impulse purchases.

Solution #10 – Open a separate, high-yield savings account

The single most important element of staying out of debt in the future is breaking the paycheck-to-paycheck cycle.

This is ONLY done by having two types of savings account.

• The rainy day fund – a small cash cushion of $500 to $1,000 to cover emergencies. (Here’s how I saved up my first $1,000 rainy day fund in under 45 days.)
• Long term savings – This is a separate savings account for your emergency fund and long-term savings.

By having both you’ll be able to plan for both financial goals and the unexpected. Preparing for each not only keeps you out of debt but helps to build real, lasting wealth.

Becoming debt free isn’t easy, and it’s even harder to stay that way. So while the question of how to get out of debt with no money may seem impossible, the truth is that with a little determination and creativity you can become debt free and a step closer to living your financial best life.