If you’re considering how to get out of debt with no money and bad credit—you need a plan. Once it’s developed, you need to stick to it and carry it out. Sure, you may be thinking it’s not possible but you’re wrong in that assessment because it’s absolutely doable.

First, let’s tackle a myth: Learning how to get out of debt with no money and bad credit, and then actually doing it is easy. Sorry, there is no secret formula for making your debt disappear. It’s challenging, especially for someone who’s broke. It requires dedication and lifestyle changes. However, it’s entirely possible for anyone to become debt-free.

How to Get Out of Debt With No Money and Bad Credit

Let’s face it; nobody ever truly plans on getting into debt. As the debt begins to mount up, many go into denial, ignoring it entirely until it’s already drowning us and wrecked our credit. If you want to be free of debt then it’s essential to face the music and learn how to get out of debt with no money and bad credit.

Before you begin, gather up the following:

• Most recent statements for your loans, credit cards, and bills, including student loans
• Collect your annual credit reports for an updated report
• Get your current credit score
• Current income

1. Give yourself a financial check-up

Put all of your debt into a list and tally it up. Rip it off like a Band-Aid. Don’t be afraid to do this because confronting your debt is the single most important step to freedom. Yes, it’ll sting a little but the longer you ignore it, the worse it’s going to become.

Figure out your income. If you have more than one job or additional income from a significant other or spouse, include everything coming in that can be considered income. This helps you really see the entire picture of your financial reality.

2. Essentials vs. non-essentials

Essentials are expenses like food, rent, and power bill. Items not falling under this list are expendable. Netflix, Hulu, and Starbucks are examples of extras that you can do without. If you’re spending $25 on Starbucks’ coffee every week, then it’s around $100 per month. It adds up! After you’ve eliminated the unnecessary expenses, any leftover income is known as a surplus.

3. Create your budget

Once you have all of the numbers down on paper, create a budget. How much money do you need to earn to make ends meet? Writing everything down gives you a better visual of the actual debt you need to tackle because it’s right there in front of you instead of floating around in your head.

Remember, your budget may fluctuate slightly but try to keep it around the same amount every month. Also, if some bills have to go unpaid beyond their due date, figure out how long you can go without paying them before impacting your credit. If you already have bad credit, don’t focus on that for now. Your credit score will improve after everything else is under control.

Plus, debts like delinquent medical bills fall off your credit report after seven years. If you only have a couple of years left and have not taken steps to settle your medical bill debt, you should pay off other debts instead. You might want to consider credit counseling but be wary and learn how to identify debt relief scams to protect yourself against further financial ruin.

4. Are you broke or barely making ends meet?

There’s a big difference between having no money and having no money at the end of the month or after every paycheck. Truly broke individuals barely make ends meet and sometimes struggle to cover their monthly bills on time. If you have money to spend on non-essentials, then you’re not actually broke. Changing your spending habits would greatly benefit you.

Any person wanting to learn how to get out of debt with no money and bad credit can’t allow wiggle room for any extras at the end of each paycheck. Any excess money should be put toward your debt.

5. Change your way of living

Don’t buy items you can’t afford. If it’s not a part of your budget, absolutely do not purchase it. Getting out of debt requires absolute discipline and restraint. Outside of medical and student loan debt, many people get themselves into trouble because they buy things they can’t afford.

If you have a bachelor’s degree along with loans totaling $30k, don’t take on additional student loans to get your master’s because getting a degree doesn’t necessarily guarantee you a job in that field.

More ways to save money:

• Become a loyal coupon cutter
• Cook at home
• Pack a lunch
• Cancel your cable
• If you can, move to a region with a lower cost of living
• Cancel your gym membership
• Carpool or bike to work
• The ideas are endless
• Ask your creditors for a lower interest rate

Changing our habits and way of living is very difficult because we become accustomed to our lifestyle, whether we can afford it or not. We don’t want to give up our lifestyles because it’s a part of our identity. Plus, it can be embarrassing and a blow to our egos. However, it’s necessary since finding ways to save money helps you get out of debt faster.

6. Earn more money

Finally, here’s another difficult, but absolutely vital, step to take if you’re serious about getting out of debt. Changing your spending habits helps to reallocate additional money toward your debt; you’re going to have to make more money. Get creative and find a way to earn supplementary cash:

• Ask for a raise. If you’ve never asked for a raise, don’t be afraid of asking for one now. The worst thing that could happen is your boss doesn’t give you one.
• Get another job. It can be a part-time position selling pizzas or working as a server.
• Sell things. If you have items sitting around, then get rid of it by selling your stuff on websites like Craigslist, eBay, or OfferUp.
• Find odd jobs through local companies, like running errands or other tasks.

There are limitless possibilities to make additional cash if you start looking.

Make Life Changes to Stay Debt-Free

People wind up in debt and with bad credit for a variety of reasons such as a result of school loans, job loss, living beyond their means, or medical bills. The reason behind your debt doesn’t matter. Make up your mind to change your habits and never go into debt again.

Remember, you don’t have to stay in debt your whole life. Learning how to get out of debt with no money and bad credit will help you create a solid financial plan to becoming debt-free.