How to Get Out of Debt on a Shoestring Budget

Pay off debt.

Perhaps your credit card bills are getting higher each month, or you received a large bill from an unexpected repair. Each day more and more people are becoming overwhelmed with debt. Finding ways to get out of debt is especially hard when you are on a shoestring budget. Even though your finances may be limited, there are ways to become debt free. The key to lowering debt on a shoestring budget is to find practical ways to reduce what you owe and to increase the income in your budget.

Things You'll Need

• Credit card statements
• Monthly bills

Instructions

1. 

   Stop using credit cards.

   Stop using credit cards immediately. Put your credit cards in a secured place or cut them up so that you are not tempted to use them. Eliminate new charges on your credit card accounts by using cash or a debit card linked to your checking account.

2. 

   Call to ask for a lower interest rate on your credit card

   Call your credit card company and ask them to lower the interest rate on your account. Ask for a supervisor if the first person denies your request. Continue to ask for a higher supervisor until you get a lower rate assigned to your account. Do this for each of your credit cards.

3. 

   Sell scrap metal for a profit

   Collect unwanted scrap metal and sell it to your local scrap yard. Offer to pick up unwanted metal bed frames, used appliances, and other metal items from people. Haul it to the local scrap yard and sell it for a profit. Collect the money from the scrap yard and use it to pay off any existing bills.

4. 

   Build an emergency fund to help get out of debt.

   Contribute 10 percent of the money from your paycheck each month to build an emergency fund. Use the emergency fund to pay for unexpected bills outright instead of increasing your debt balances. Fund your emergency account automatically with direct deposit to help you curb your spending habits.

5. 

   Sell unwanted items to make extra cash

   Sell unwanted personal items at a yard sale or on an online auction site. Factor in any supply costs or listing fees when determining a price for your items. Use the money collected from these endeavors to help pay off debt you incurred.

References

• Federal Reserve Board: Managing Your Credit
• Utah State Office of Education: Debt, Money and Happiness
• U.S. Small Business Administration: Entrepreneurial Friends Turn Scrap Metal Into A Profit

Resources

• New York City Department of Consumer Affairs: Debit/Credit Help - Getting Out of Debt