When you’re in debt and broke, the only thing that seems to be the only thing left to do is to file for bankruptcy. Although it can help you get out of debt when you’re broke, it will also affect your credit score. Even if you can get back on your feet, the bankruptcy would have ruined your credit standing and would keep coming back to haunt you.
Thankfully, there are ways on how you can get out of debt without having to file for bankruptcy even if you’re broke. Here’s how.
Talk to your creditors
One of the biggest mistakes people make when they are in debt is to dodge their creditors as much as they can for the simple reason that they don’t have the money to pay their debt. What many don’t realize is that many creditors are more than willing to make adjustments on your outstanding debt so that it can become more affordable, especially if you went through a major financial crisis like an emergency in the family or being laid off from work.
Check your credit card statement
Although looking at your credit card statement can be quite dreadful, taking a look at this will help you see that there are actually some charges like annual fees that you can request to be waived. Also, it will also help you determine the minimum amount that you can pay in order not to incur any additional charges. Just make sure that you don’t be late on your payments. Otherwise, you can be charged with late fees.
Review your expenses last month
Take a close and careful look at every single thing that you’ve spent your money on the previous month, no matter how little this could be. It can help you see not only where your money is really going, but also which expenses you can cut back on so that you can use this to pay off your bills first.
Prioritize the essentials
When you’ve got a very tight budget to work on, focus on the bills that are the most essential. That includes your home, car, groceries, and utilities. These are usually the basic and important things you need not only to live on a day to day basis, but also contribute to a huge chunk of your expenses.
Don’t forget to save
Many people would say that it’s forgivable if you won’t be able to stash a few dollars while you’re trying to get out of debt. But here’s the thing. If you can’t start saving now, when will you will be able to start? The amount doesn’t have to be a lot. $10 a month is a good start.
Track as you go
The best way on how to start becoming debt free is keep an eye on your money as you spend it. The more you keep an eye on your money, the more you’ll become vigilant with your spending habits. There are a lot of budgeting apps that you can download for free to help you with that.