How to live on a single income and manage debt

It can be challenging to live on a single income — especially if you have debts to pay. You may feel like you are barely making ends meet, or that you have no room to contribute to savings or investments. However, with some planning and determination, you can live on a single income and manage your debt effectively. These are some tips to help you achieve your financial goals.

Create a budget and track your expenses

The first step to managing your debt while living on a single income is to create a realistic budget that reflects your income and expenses. This helps you see where your money is going — and how much you can allocate to your debt payments, savings, and other needs.

You can use a spreadsheet, an app, or a notebook to create and track your budget. The key is to be honest and accurate about your income and expenses.

Find new ways to save money

The next step is to explore ways to save money wherever you can. This may require some lifestyle changes — but it will pay off in the long run. Here are some ideas to help you cut costs and save money:

• Evaluate your subscriptions and memberships — Cancel or downgrade any subscriptions or memberships that you don’t use or need. For example, you may be able to stream movies and shows online instead of paying for cable TV.
• Cook at home more often — Eating out can be expensive. You can save money and eat better by preparing your own meals and snacks at home and packing your own lunches.
• Use savings opportunities — Use coupons, discounts, and cashback apps when you shop.
• Reduce your utility bills — You can lower your utility bills by turning off lights and appliances when not in use, using a programmable thermostat, installing energy-efficient bulbs, and fixing any leaks or drips.

Pay off your debts as soon as possible

The last step is to pay off your debts as soon as possible. The longer you carry debt, the more interest you will pay — making it more difficult to get out of debt. These are some strategies to pay off your debts faster and save money on interest:

Document your debts

Make a list of all your debts, including the balance, interest rate, and minimum payment. Then prioritize your debts by either paying off the ones with the highest interest rate first (the avalanche method) or the ones with the lowest balance first (the snowball method).

No matter which option you choose, you should pay more than the minimum payment on your highest priority debt, and the minimum payment on the rest.

Explore options to consolidate your debts

You may be able to transfer your credit card balances to a lower-interest credit card or take out a personal loan to pay off your debts. This way, you will only have one payment to make each month and you will pay less interest overall.

Use any extra income to pay off your debts

It may be helpful to use a bonus, a tax refund, or any other source of extra income to pay off your debts. This will help reduce your debt faster and save money on interest.

Take control of your financial future

It can be difficult to live on a single income and manage your debt — but it’s not impossible. Following these tips can help you live within your budget, save money, and pay off your debts. It will also help you feel more confident and in control of your finances.

If you are struggling to manage your debts, contact your local Licensed Insolvency Trustee (LIT). We can help you evaluate all your debt relief options with a Free Confidential Consultation to help you get back on the path toward financial freedom — including Consumer Proposals and Bankruptcy. Together, we can help you take control of your financial future.