The Best Way to Pay Off Debt When You’re Broke

How to get rid of debt on a low income

The pandemic has affected many households. With businesses closing or reducing staff, many have lost jobs or have had to take on lower-paying jobs. While the income flow has slowed or even stopped, debt and bills remain. You want to maintain a good financial picture, but how do you pay off debt when you’re broke?

Don’t worry. It is possible. You may have to be creative or take on jobs you may not otherwise consider, but it can be done.

What to do when your bills exceed your income?

At some point in life, you may find that your bills are more than your income. It’s happened to most of us due to a job change, job loss, or an increase in expenses. So what do you do when your bills exceed your income? I mean, how can you get out of debt if you live paycheck to paycheck? Here are some beginning steps:

  • Start by making a list of all of your expenses and debts including the amount due for each.
  • Look at each expense and notate which are “Needs” and which are “Wants”. “Needs” are those expenses that you can’t live without: mortgage/rent, utilities, gas, groceries, and things like these. “Wants” are those extra expenses that make life better, but aren’t essential. This includes things like cable, streaming services, eating out, and other nice-to-have expenses.
  • Now, hold on to your list. We’re going to come back to it in the next section below where you’ll learn some other creative ways to pay off debt.

Wait! Please make sure you don’t skip this step. It’s one very important way you can pay off your debt if you don’t have enough money. Make the list and bring it with you to the next section below.

*Note: When you click the links in this post, I may receive a commission at no extra cost to you.

Top Ways to Pay Off Debt When You’re Broke

Time needed: 5 minutes.

How To Pay Off Debt Fast
We’ve learned one way how to pay off debt on a low income, or at least we started talking about it. What we have learned is that it is possible. Now, here are some creative ways to pay off debt quickly:

How do I get out of debt if I broke?

  1. Get rid of extra expenses

    Believe it or not, cable and streaming services are not necessities. Take a look at your list of “Wants” that you created in the section above. Now it’s time to make the tough decision to let them go. It may hurt, but it’s necessary in order for you to get out of debt on a low income. Cancel those services and direct those monies toward your debt payments.

  2. Create a budget

    Preparing a budget before you get your paycheck helps to direct where your money goes. It also helps you ensure you’ll have enough each month to cover your expenses.

    Creating a budget doesn’t have to be hard. I talk about different budgeting methods that work well on this blog. The important thing is to choose a method that works for you and stick to it!
    how to get out of debt on a low income

  3. Stop eating out.

    Eating out can be a fun, family bonding time, or a quick solution to a busy day. But when you’re trying to get out of debt on a low income, eating out becomes a luxury that should be reserved for special (infrequent) occasions.

    So how does this help me pay off debt fast, you ask? Here’s how. Look through your bank statements for the past two- to three months and determine the average amount you spent on eating out.

    Take this amount and add it to your budget for debt payments, then subtract it from your budget for entertainment (or whichever budget area you used for eating out). You’ll learn in Steps 4 and 5 how to better manage your Grocery budget so you won’t miss this money at all.

  4. Embrace meal planning.

    I resisted for a long time because I loved the spontaneity of planning meals the day of. But when I saw how much I could save by planning ahead (and how it helped me stick to my healthy eating plan), I was all in.

    Some of the best meal planning advice I’ve found has come from Jordan Page’s Productivity Bootcamp. She teaches you to shop from your freezer, refrigerator, and pantry first, then shop the sales at stores.

    Once you have an idea of what food items you already have, and you see what items are on sale, you can find recipes that use those items. Once you’ve found recipes you like using the ingredients you have on hand, make a list of any items you’re missing (which should be few), and then go shopping.

    This method has helped me save a lot each week on groceries. Jordan’s bootcamp also teaches you how to set a grocery budget and ways to make sure you stay within budget. It has absolutely transformed my budget.
    How to get out of debt with low income

  5. Grocery shop only once a week.

    This, too, is a tip from Jordan Page’s Productivity Bootcamp and it, along with her other tips, saved me almost $200 a month in groceries.

    By planning your meals first, then going to only one store, one time a week, you’ll be able to cut out impulse buying and save money. The money you save can be redirected to debt payments so you can pay off debt fast.

  6. Use coupons

    Yes, coupons are still a thing, and they can save your $5 to $10 each grocery trip depending on where you go and what you buy. Some stores, like Kroger, have their own coupons that print based on your shopping habits. These are excellent because you get to save on items you actually use.

    Look for savings memberships or shoppers cards for the stores you go to the most. Then take advantage of their sales and savings coupons. When you get your receipt, look at the amount saved and take that same amount from your Grocery budget to pay on a debt.How can I get out of debt if I live paycheck to paycheck?

  7. Start a work at home job

    There are some legitimate ways to make money from home. Having an at-home job gives you more freedom and flexibility while helping you earn extra money. You can decide to use all or part of the money you make for debt payments.

    I post legitimate work at home jobs here on my blog, but I’ll highlight two that I’ve made the most money with.

    Appen is a company that collects and labels images, text, speech, audio, video, and other data to help improve the world’s most innovative artificial intelligence systems. They offer various flexible positions as independent contractors. By working with them, I have been able to make up to $1,000 a month part-time.

    Another great company is VIPKids. If you like working with kids and have a good handle on the English language, this might be a good fit for you. With VIPKids, you get paid $7-9 for each 25-minute class which works out to $14-18 per hour plus incentives. Visit the VIPKids site to learn more.

    Check out the other work at home jobs from companies looking for remote workers.

  8. Find a side gig

    Finding ways to pay off debt fast can sometimes mean taking on side gigs. These moderately-paying jobs are easy to do and can be done during your downtime. Every dollar counts.

    Some of the gigs I did when I first left my corporate job to come home included surveys. I would do them while my kids napped or for a few minutes after their bedtime–and I really got paid! Here are some of my favorites:

    Survey Junkie – take surveys, earn rewards, and redeem your virtual points for PayPal or e-Giftcards.

    Inbox Dollars – earn real cash (not points) for your everyday online activities.

    Swagbucks – when you shop on Swagbucks, you can find exclusive coupons and earn BIG cashback.

    Ebates/Rakuten – earn up to 40% cashback at over 2,500 stores with no points, no fees, and no forms.

    PanelPlace – simply browse digital products and services to see the opportunity it offers, grab the ones that you like, use them, and then enjoy the benefits and share your reviews.

    OpinionWorld – when you sign up, you’ll be able to redeem the points you earn completing surveys for money from dozens of top brands. 

    Opinion Outpost – this is a top-rated paid online survey site where you get paid to take surveys.

  9. Sell what you don’t use

    You may have clothes you’ve never worn hanging in your closet with the tags still on them. Or books you’ve purchased that you no longer need. These are just an idea of some of the items you can sell online for cash.

    Places like eBay, Poshmark, OfferUp, and Facebook Marketplace allow you to sell your gently used items and recoup part of your cost. Take your profits and add them to your debt payments to help you pay off debt faster.

  10. Stop using credit.

    Unless you break the cycle, you will always be using your hard-earned dollars to pay off debt. Yes, there are some very responsible people who limit their credit purchases and pay their balances off every month. But if you’re taking notes from this post, then you probably need to cut up your credit card.

    Instead of buying things before you can afford them, try saving up for bigger purchases instead. You’ll avoid debt and unnecessary interest payments, and free up more money for more fun uses.

So, there you have it–the best way to pay off debt when you’re broke. These methods worked for me and I’m sure they’ll work for you too.

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