Our Guide on How to Get Out of Debt With No Money

Love Debt Free guide to reducing your debt even if you don't have any money
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Trying to find your way out of debt when you’re broke might feel like an impossible task, but we have details on how you can achieve this.

Step 1: Confront Your Debt

Identify How Much Debt You Have.

To tackle your debt problem, you first need to know how much you owe. It can be daunting to add everything up, but ignoring your debt and hoping it magically disappears won’t get you very far (unfortunately).

The number you’re looking for a sum total of all your debts: credit card debt, personal loans, store cards, council tax arrears…the lot. If you’re not sure how much you owe, request updated balance statements from your lenders to get an accurate picture.

Once you have the sum of your total debts, work out how much you need to spend each month to make your minimum payments. With these two figures, it is possible to see exactly how far you have to go and start building a plan to start eliminating your debt.

Work out your debt-to-income ratio

A debt-to-income ratio (DTI) is a useful tool which allows you to measure the size of your debt in comparison to your income.

This is important because someone on a salary of £40,000 could probably clear £10,000 debt relatively quickly compared to someone on minimum wage. Your debt to income ratio will help you get a realistic picture of the debt problem you’re facing. As you work towards paying off your debt, you can use it to measure your progress and to work out the value of any additional income in relation to paying off your debt.

You can work out a DTI for your monthly spending on debt of for your total debt. To work out your total DTI, you need to work out what percentage of your annual income is represented by debt.

To do this:

  • Add up all of your debts to find the total of everything you owe  
  • Divide it by your annual pre-tax income
  • Multiply this number by 100

For example, someone of a salary of £27,000 with £13,500 debt would have a debt-to-income ratio of 2.0. This higher the number, the larger the debt. Most lenders consider a healthy debt ratio to be below 0.45.

To work out your debt-to-income ratio for your monthly spending, follow the same steps using the total amount you spend on repayments per month and your monthly pre-tax income.

Prioritise Your Debts

Once you have an accurate picture of how much you know, try to rank your debts in order of priority.

Emergency Debts

Include any debt emergencies at the top of your list: an impending visit from the bailiffs or county court hearing are examples of emergencies. It would help if you tried to deal with these straight away.

Call your lenders and see if there is any way to negotiate with them overpayment, attend your court date and do the same, or speak with a debt counsellor, who can negotiate on your behalf.

Ignoring debt emergencies could lead to further legal action, repossession and fines, all of which will only bring more problems

Priority Debts

Following any emergencies, list your priority debts. These are debts which have serious consequences (and could lead to a debt emergency) if not paid on time.

Some common examples of priority debts are:

  • Council Tax
  • Child maintenance
  • Income Tax
  • Court fines
  • Secured loans such as mortgages or logbook loans
  • Hire purchase agreements on an essential vehicle or appliance

Non-Priority Debts

Everything else comes after this. There are still consequences for not paying unsecured loans and other non-priority loans, but you are unlikely to lose your home or face immediate legal action if you fall behind on repayments.

Typical non-priority debts include:

  • Overdrafts
  • Unsecured personal loans
  • Credit cards
  • Loans from friends and family

See if You Can Negotiate Your Interest Rates With Lenders.

Provided that you are consistent in paying your debts on time, it might be possible to negotiate with your lender for a lower interest rate. This could help you pay off your debts faster, as it would lower your minimum monthly payment and allowing you to make overpayments without even having to change your current budget.

Refer back to your balance statements to check the interest rates you pay on each of your debts. If there are any which seem unusually high, try contacting the lender. Explain that you are struggling to make a dent in your debt due to the high-interest rate and ask whether they could consider charging you less.

It won’t work every time, but if you have held a debt for a long time and been consistent with your repayments there is a chance you could get a reduction.

Choose a Repayment Strategy to Keep You Motivated.

This is the final stage in organising your debts and will help you decide how to pay them off. For each category of debt (priority/non-priority), rank them in terms of cost per month.

You can use this information to settle on the repayment style that you most like the sound of.

Once you’ve organised your budget, you’ll use any extra income to make overpayments to your debts in order of their size:


Tackle your cheapest and smallest debts first. With this strategy, you’ll make quick progress on your smaller debts. Seeing these accounts close quickly can help keep you motivated when it comes to paying down the balance on your larger debts.


Tackle your most significant and most expensive debts first. It will take a long time until you close your first account, but after this one, the other will follow in quick succession.

You’ll also save more money overall because your most expensive debts will have less time to accumulate interest.

Identify Your Spending Habits.

You now have a clear idea of your debts and how much they cost you each month. Now it’s time to do the same with your budget and take stock of what your current spending looks like.

Write Out Your Current Budget.

Write out your monthly budget and analyse your spending habits. Don’t guess- use your bank statements (or receipts if you spend in cash) to try and get a clear picture of exactly where your money is going.

Add up how much you spend each month on debt, other essentials, and luxury or non-essential items (everything else). This will help you work out what’s pushing you over the edge and what kind of approach you need to take in order to pay off your debts.

Someone with lots of non-essential expenses will be able to free up extra cash simply by cutting back on these; while someone whose income is swallowed up entirely by essentials and debts needs a different approach.  

Be Clear About What Got You Into Debt.

To avoid slipping back into debt in the future, it is important to be aware of what caused you to end up in debt in the first place.

Depending on your circumstances, there could be an obvious event (e.g. redundancy) that triggered your debt woes, or a combination of events and behaviours at play. You might need to dig into your budget to find the root cause.

Once you’ve got a good idea of what landed you in your current situation, start thinking about what you can do in the long run to change to avoid history repeating itself.

Root CauseLong Term Goal
Expensive Habits (e.g. eating out, shopping splurges, smoking)Work out how you can afford to spend on your habit and learn to live within your means
Job LossOnce you’re out of debt, make it a priority to start saving money for a ‘rainy day’
Low IncomeApply for jobs with higher salaries, work towards a promotion or think of taking on a new side hustle. After you are out of debt, consider training for a new (better-paying) career.
Extortionate RentMove to a more affordable area. If that’s difficult due to family ties, consider moving closer to work for savings on your commute instead

Put Your Findings to Work.

There is no quick-fix solution to work your way out of debt, and you should tailor your plan to get out of debt to your circumstances.

Much of the time, these things are easier said than done; but just by understanding your spending and debts in detail, you’ve already taken an important step towards reclaiming control of your finances.

Use the information you have about your debts and spending habits to decide whether any of these measures could help to target your problem areas and get you started on the journey to becoming debt-free.

Stick to Your Budget

If overspending is an issue for you, sticking to your budget is a top priority to get you out of debt. While it may feel like you’re making sacrifices by forgoing luxuries to live a more frugal lifestyle, you’ll thank yourself in the long run.

Use the money you save for overpaying on your debts wherever possible, and measure your progress as you go to help stay motivated.

Stop Borrowing

Damage limitation is the name of the game. If you plan to get rid of your debts, be good to yourself and remove the temptation to create more of them. Cut up credit cards and store cards (if you don’t need them to make repayments) and speak to your bank about reducing your overdrafts.

If you are regularly dependent on borrowing to pay for daily essentials and can’t see any way of reducing your expenses, it could be a good idea to speak to a debt counsellor.

They will be able to offer you non-judgemental advice and can negotiate with your creditors for reduced payments which could help to ease your reliance on credit.

Work Out How to Reduce Your Expenses.

Depending on your budget, this could be as straightforward as avoiding the pub on a Friday night, or it might require more extreme intervention.

If there are no obvious luxuries in your monthly spending, you might have to dig a little deeper to find ways to save. Check the rates you’re paying for energy, phones internet to see if you could make savings elsewhere.

Investigate whether you could save money on your debts by consolidating them in a low-interest loan or moving to a 0% balance transfer card.

If you’re still coming up short for ways to save, you may need to consider more extreme options.

Could you save money by moving house, getting a job closer to home, or buying a more economical vehicle?

Think of Ways to Boost Your Income

Working two jobs is exhausting, but if you can manage it, then taking on a second contract is a sure-fire way to earn extra money.

If that isn’t an option for you, think about how to boost your income with the job you’ve got. Work towards a promotion, and start actively searching for higher-paying jobs in your field.

Online side-gigs could provide helpful boosters to your regular income. From writing reviews to e-retail or tutoring over Skype, you could be able to help your debt payments along with informal part-time gigs online.  

Sell Your Non-Essentials

From that guitar sat in the corner gathering dust to the impulse-purchase sequinned bomber hanging in your wardrobe…many people have at least one or two non-essential items lying around their home that would not be greatly missed but could help to raise all-important cash to pay down those debts.

Move Your Loan

If you have a reasonable credit score, there is a good chance you could qualify for a 0% balance transfer credit card or debt consolidation loan. Both of these options could save you money on interest and help make your debts easier to manage by keeping them all in one place.

With a 0% balance transfer credit card, you can move your debts onto one account and won’t pay any interest on them for up to 18 months. It is crucial that you continue making payments during this period, as you’ll start being charged interest again once the introductory offer ends.

With a debt consolidation loan, you move all of your debts to one account. You’ll be charged interest from the beginning, but it is possible to get fairly low rates provided you have a reasonable credit rating.

In both cases, keep paying the maximum you can afford to clear your debts as quickly as possible.

Find Support From Others Like You.

There are countless communities and blogs online for people who are trying to reduce their debts. Finding them can help you stay focused, reassure you that your goals are possible and lend you support when you hit the inevitable bumps in the road.  

It can be difficult to talk to family and friends about finance, but if you look, you’ll find success stories and support online from people worldwide who are in a similar situation to your own.

Debt Counselling

A debt counselling agency works with you to assess your finances and work out how much you can afford to repay. They may negotiate with creditors on your behalf to help reduce your payments, which can ease the pressure on your budget and give you room to think.

Once you have agreed on a payment plan, you make a single deposit to the agency, which then distributes the payment among your creditors. Ideally, this should be a last resort, as debt management plans can harm your credit rating.

How Can Love Debt Free Help?

Here at Love Debt Free, we have partnered with some of the UK’s leading Debt help companies.

They have already helped thousands of people reduce and manage their debts, and they can do the same for you.

Choosing an independent adviser means they won’t recommend a scheme unless they are sure it is in your best interests. Their advice is also regulated by the FCA, which gives you an additional layer of protection.

If you would like to speak to one of these debt help companies, click on the below and answer the questions.

Len Burgess
Len Burgess
Len Burgess is a successful digital entrepreneur and founder of LBLK Publishing which specialises in Financial content. Len has been writing professionally on financial and business topics for 5 years before starting Love Debt Free.
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