How to Get Out of Debt on a Low Income

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The cost of living continues to rise in Canada and around the world. It’s never been more difficult to save money and pay off debts, given the ever-increasing cost of everyday items like gas and groceries. Rents are going up, especially in big metropolitan centres like Toronto and Vancouver. The cost of housing has never been higher, and high interest rates are making mortgages more expensive than ever. In the meantime, inflation remains a problem. Given all these economic circumstances, it can be particularly challenging for people with a low income to escape the debt trap.

Fortunately, we have some useful tips for how you can do just that. Mind you, these are not a quick fix but a long-term strategy. 

Tips for Getting Out of Debt on a Low Income 

Below are some tips for getting out of debt on a low income. Debt is a source of stress for many Canadians. Notably, it’s been reported that over a third of Canadians struggle to buy the things they need. If you fall into that category, you’re definitely not alone! Take heart – there is a way forward. Our tips could help set you on a path to a better financial future. 

Our tips range from increasing your income to debt consolidation. Read below for more details. 

Tip #1: Increase Your Income 

This may seem obvious, even cliché. However, there is always potential to increase your income. It’s difficult to pay off debts and build savings without a sufficient income. If you’ve been contemplating a career shift or learning a new skill, there are ways to do so without paying excessive amounts. Online courses are often available for reasonable prices – or even, in some cases, for free!

For example, if you want to learn coding, you could easily do that using an online platform. All it takes is a little dedication. In a matter of weeks or months, you could have a certification in Python or another programming language and be well on your way to becoming a programmer – typically a well-paid profession! 

If coding is not your thing, you may consider starting a side-hustle, such as selling art online. It’s never been easier to upload your art and sell it via various online platforms. You may be just a quick Google search away from selling your art on the Internet. 

One additional great way to make some extra cash is by filling out surveys at Swagbucks. You can redeem gift cards to retailers like Amazon and Walmart and get cashback from PayPal, simply by filling out online surveys that range from single-question polls to 30-minute market research questionnaires. Check it out now! 

In some cases, it may be helpful to add a second job, such as a part-time weekend gig, to supplement your main source of income. While this may not be an ideal solution, it could tide you over in times of need. Online job boards are a good source for part-time jobs. There are always more opportunities to be found in your area. 

Naturally, there are multiple ways to enhance your career journey or shift into a new gear. Be creative in finding solutions and think outside of the box. A good career may be closer than you think! It does require perseverance and creative thinking on your part – along with careful planning and execution. Debt is not easy to get rid of, so approach it with a long-term mindset. 

Tip #2: Consolidate Your Debts 

Debt consolidation could be a good way to lower the overall interest rate and your monthly payments. In addition, it can help simplify your debt and make you feel more organized. Instead of worrying about multiple debts, you can focus on paying off a single debt. 

As with any other type of loan, you’ll be charged interest, but the APR may be lower than for a credit card. Once approved for the loan, the lender will typically pay off your creditors directly, in accordance with the information you provide. Reducing the number of creditors will likely reduce your stress. 

One con to consider: debt consolidation isn’t a magic pill or a one-size-fits-all. It’s helpful to look at the root causes that gave rise to your debt situation. Once that’s fixed, paying off your debts may become easier. 

In addition, a lender may not always offer you a lower interest rate on your consolidated debt. Take these cons into account as you consider whether to pursue debt consolidation. If you’re in doubt, speak with a financial advisor. 

Tip #3: Allocate Your Spending Wisely 

Aim to spend about half of your income on must haves, 30% on wants, and 20% on paying down any debt. This will take a solid budget and financial discipline, but it is possible, and it will speed up the process of paying off your debt. In combination with tips #1 and #2, this could be the long-term solution to your debt problem. 

To create your budget, you can use online apps or even a simple Excel spreadsheet. Note your total monthly income and categorize your monthly expenses. Unavoidable expenses such as rent or mortgage payments, gas, groceries, and so on may be categorized as must haves while dining out and travel will fall into the category of wants. Set aside a dedicated amount each month to pay toward your debts. Even with a high income, without a budget, an individual may run into debt problems. Don’t underestimate the importance of a good budget and good financial discipline and organization. 

If you need quick cash, fill out a fast online application at Crediteck! We do not perform credit checks as part of our application process, and you will be connected with a lender instantly. This could help tide you over while you navigate your debt and plan for a better future.

Tip #4: Identify Problematic Habits 

Your debt didn’t come out of nowhere. It was likely a cumulative result of multiple factors, behaviours, and habits. If you’ve had unhealthy spending habits in the past, it’s time to identify those and get to the bottom of why you were overspending. Was it the lack of a clear budget plan? Was it failing to resist temptation in the moment? Make sure you identify the problematic behaviours that led to the debt in the first place and work to rectify those. Having sound financial discipline, even with a low income, will lead to a better overall outcome than not practicing such discipline. Even a high income may not be sufficient to combat poor or excessive spending habits. 

If you’re caught between two paydays without sufficient funds, Crediteck could help you! Fill out our simple and easy online application and get connected with a lender in an instant. We do not do credit checks as part of our application process. Receiving a quick cash loan could be the initial solution to your short-term debt. 

If you need to check your credit score or credit report, you can use Credit Verify! It only takes a few minutes to register, and you can have instant access to your credit score and credit report online as well as enjoy additional features. 

In Summary 

A heavy debt load could be due to more factors than just a low income. It’s important to curb out-of-control spending, look for ways to increase your income by learning new skills, allocate your spending wisely, and, in some cases, it might be worthwhile to consider debt consolidation. This could simplify the repayment process, although no loan is ever without its risks. Develop a plan and make a concerted effort to follow it. Make appropriate adjustments along the way and don’t give up. It’s likely going to take time and persistence to escape the debt trap. 

Crediteck is here to help. Fill out our quick online application and be instantly connected with a lender in Canada. If you ever run out of cash, Crediteck could potentially save the day by connecting you with a lender. You could receive funds as soon as the next day! We do not charge our applicants any fees. Moreover, we do not perform credit checks as part of our application process, so even with bad credit, you may be able to get the loan you need – fast. 

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