5 Tips On How to Get Out of Debt When You’re Broke

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I remember sitting down to calculate all of our debt.

The number kept climbing, and I was still nowhere near the end of the list of debts to add in.

I remember thinking, “we’ll never get out of this debt. It’s too much.”.

Luckily, I didn’t listen to that voice for too long. If I did, we wouldn’t be where we are today. We needed someone or something to tell us how to get out of debt when you’re broke and scared.

It wasn’t a snap of the fingers to change my mindset from “never get out of this” to “we’ve got this”. It took looking at our lifestyle and mindset and really making some changes.

Because, chances are, you won’t be able to get to where you want to be if you don’t change some things as well.

So, what exactly did we change to get out of over $100,000 in debt?

1. Get on a budget

If you take nothing away from this post, this is the most important!

We were mindlessly spending. To the point where we were living paycheck to paycheck. And even then, we struggled waiting for that next paycheck.

Our money was flying out of our hands faster than we were making it. So how did we expect we could pay off debt faster than just paying the minimum payments?

We couldn’t.

So, we sat down and created a budget to tell our money where to go before it even got into our hands. This stopped us from mindlessly spending.

And all of a sudden, it felt like we got a raise.

I’m not over-exaggerating. It literally felt like we had more money. And we didn’t increase our income by even a penny!

Having a budget allowed us to put more money toward our debts to pay them off so quickly. Before, we didn’t have that option. That’s because we spent it so quickly on frivolous things, like going out to eat, mall trips, etc.

Don’t know where to start? Check out our beginner’s guide to budgeting or our ultimate budgeting checklist to get started!

2. Make a plan

Having a budget is really important. But you also need a plan so you know where to throw your money to get the maximum reward.

The plan that worked the best for us was Dave Ramsey’s debt snowball method. That may or may not be the best for you, but it was certainly the best for us.

Ramsey’s debt snowball method works like this: pay minimum payments on all of your debts, but throw all of your extra money (that you found in your budget) at the smallest debt.

Then, once that smallest debt is paid off, throw everything you were paying on the smallest debt at the second smallest, plus what you were already putting on the second smallest (the minimum payment).

Continue doing this until all of your debts, except the mortgage, is paid off. The mortgage can get paid off in a different step in your financial plan.

That plan worked amazingly for us.


You pay off these smaller debts pretty quickly. And at the beginning, you need those little victories, as fast as you can get them.

Because, if you’re like us, you find these plans for paying off debt when you’re pretty scared and anxious from the amount of debt you have. So you need those little victories right away.

3. Use cash envelope system

Something that really helped keep us in check was using the cash envelope system.

Instead of using your debt card for purchases, you figure how much you’ll need for monthly expenses (like groceries, gas, toiletries, etc.) in your budget before the month begins. Then, you’ll take the money out for each category and divvy it up into your envelopes.

Once the money runs out, it’s gone.

What if there’s still another week left in the month and you have groceries to buy?

You’ll have to “borrow” from a different fund and be short there instead. But hopefully, you are setting your budget to accommodate your spending needs ahead of time.

Using cash also trips the pain receptors in your brain when you use it.

In other words, it hurts a lot more to hand over your cash to pay for something than it does to use your debit card.

4. Keep your motivation strong

This might look different for you than it did for us.

There were a few things we did to keep ourselves motivated along the way.

First, I really liked to read stories from real-life people who paid off their big debt. It helped to see the struggles they went through, what they found helped them, and most importantly, what their lives looked like on the other side of paying off their debt.

Second, we had a debt payoff chart hung up on our fridge. That way, it was always seen. It really helped to see the progress we had made!

Third, we remembered our “why”. Why did we want to get out of debt? We wanted to stop paying hundreds of dollars each month to debts, to be able to travel more, and to save up money.

Lastly, we used the next tip on this list, #5.

5. Reward yourself along the way

You’ll feel like a hamster in a hamster wheel if you keep chugging along in your debt payoff without any type of reward. And soon, you’ll get burned out.

Having small rewards along the way to celebrate milestones in your debt payoff journey help immensely! We had small rewards after each debt was paid off.

Nothing big. Like going out to a restaurant after not eating out for several months, buying a new pair of running shoes, or some new plants for your garden.

Whatever it is that you choose, be sure it’s out of the ordinary. Really reward yourself. But be careful not to spend too much!

That’s how to pay off debt when you’re broke!

Have you done anything specific that helped you pay off debt? Have you tried rewarding yourself along the way, and if so, what rewards have you given yourself?

Are you struggling to get started and something specific is holding you back? Or do you have any tips on how to dig yourself out of debt?

I’d love to know!

Let me know in the comments.

Are you broke and have a mound of debt? Check out our top tips on how to get out of debt when you're broke, and how to get yours paid off now! budget | debt | pay off debt | how to get out of debt | broke | tips

This Post Has 5 Comments

  1. Sarah Tucker

    Great tips here!! So important to find financial freedom and get out of debt!

  2. I love your tips and I do think that a lot more people should be aware of Dave Ramsey’s debt snowball method!

    I’ve been in $10k credit card debt before (I still up until now not sure what I bought that amounted to that amount btw) and I panicked when I couldn’t pay the minimum to not get charged the late fees.

    So I put all of my prized possessions, including my brand new Sony camera, my custom-made silk dresses and put those on sale!
    And I went from living alone in a 2bedrooms apartment in downtown to living with my friends, renting their small room 15mins drive away from downtown.

    I managed to pay off everything within 2.5 months! I just couldn’t take the negative on my credit card balance.

    Now, reflecting back on what I did, I really agree with you that it all comes down to our mindset 🙂

    1. Melissa

      I don’t say this often, but YOU GO GIRL!! What an amazing story!

  3. Taryn

    This is useful info even for people who AREN’T broke – thank you!

  4. Anna Gone Wild

    Great post!

    I really believe in simplified living in order to make ones financial future goals. We tend to live in a generation of excessive buying… Truly there is alot we don’t need and if we are willing we can live a larger life by living with less and a much happier one at that without the overhead of debt!

    Thanks for posting!

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