When you’re on a low income, managing debt can feel like trying to fill a leaking bucket.
You make a payment, but interest keeps piling on. You cut costs, but there’s never quite enough to go around.
It’s frustrating, exhausting, and often isolating.
But here’s the truth: no matter your income, there are ways to take back control.
Managing debt doesn’t require big money, just steady steps, the right tools, and a clear understanding of how debt works.
This guide will walk you through realistic, judgment-free strategies to help you stay afloat and make progress, even when money is tight.
Why managing debt is harder on a low income
Let’s acknowledge something upfront. Managing debt is harder when you’re earning less.
You have less room to absorb emergencies. You’re more exposed to high interest borrowing, like credit cards or payday loans.
And even small setbacks, like a car repair or a missed shift, can derail your progress.
But with the right approach, you can start turning things around. The key is to shift from reacting to your debt to managing it, step by step.
Step 1: Get a clear picture of what you owe
Start by gathering the facts. It might feel overwhelming, but clarity is essential.
You can’t solve a problem you don’t fully understand.
Write down:
- Who you owe money to (credit cards, overdrafts, loans, catalogues, etc.)
- How much you owe on each
- The minimum monthly payment
- The interest rate (APR) on each debt
Once it’s written down, the situation often feels less chaotic.
You’ve moved from a fog of stress to a clear, concrete list and that’s the first step to taking action.
Step 2: Prioritise your debts the right way
Not all debts are created equal. Some have more serious consequences if ignored, like rent arrears or unpaid council tax.
These are called priority debts because they affect your home, your freedom, or your ability to work.
Here’s how to think about it:
- Priority debts include rent or mortgage arrears, council tax, energy bills, court fines, child maintenance and TV Licence.
- Non-priority debts include credit cards, overdrafts, personal loans, payday loans, and store cards.
If you’re struggling to pay everything, make sure you’re focusing on priority debts first.
These are the ones that could lead to eviction, court action, or loss of services.
Once you’ve dealt with urgent debts, you can look at how to handle the rest.
Step 3: Build a barebones budget
When money is tight, a traditional budget often doesn’t reflect your reality.
Instead, create a barebones budget—a stripped-down version that focuses only on essential spending.
Break your expenses into three categories:
- Essential costs: Food, rent, utilities, transport to work
- Minimum debt payments: Especially on priority debts
- Everything else: Non-essential spending (subscriptions, takeaways, new clothes)
Look for areas where you can cut back without punishing yourself.
For example:
- Switch to own-brands or reduce meat consumption to lower your food bill
- Use comparison sites to find cheaper broadband or mobile plans
- Cut or pause unused subscriptions
A barebones budget frees up even small amounts of money that can be put towards your debts, and small steps count.
Step 4: Tackle high-interest debts first (if you can)
Once you’ve covered essentials and priority debts, focus on debts with the highest interest rates.
These are costing you the most over time.
If you can pay more than the minimum on even one high-interest debt, you reduce how much interest adds up.
This is often called the “avalanche method”:
- Keep making minimum payments on all debts
- Put any extra money towards the debt with the highest interest rate first
- Once that’s cleared, move to the next highest
Alternatively, if you need small wins to stay motivated, the “snowball method” prioritises the smallest balance first.
The maths isn’t as efficient, but the momentum it builds can make a big difference emotionally.
Choose the method that works best for you and your situation.
Step 5: Look into debt support and free advice
If your income is too low to realistically pay off what you owe, you’re not alone, and you don’t have to figure it out by yourself.
There are organisations that offer free, confidential debt advice.
They can help you:
- Create a realistic budget
- Speak to creditors on your behalf
- Set up payment plans or breathing space
- Explore debt relief options (like a Debt Management Plan or Debt Relief Order)
Here are some places to start:
- StepChange: stepchange.org
- National Debtline: nationaldebtline.org
- Citizens Advice: citizensadvice.org.uk
- Christians Against Poverty: capuk.org
These services are free, non-judgmental, and won’t try to sell you anything.
Even just talking to someone can relieve the pressure!
Step 6: Increase your income—realistically
When you’re already stretched, “just earn more” can sound tone-deaf.
But small income boosts, even temporary ones, can provide breathing room for debt payments.
Here are some realistic options to consider:
- Check benefit entitlement: Use sites like Turn2us.org.uk or Entitledto.co.uk to see if you’re missing out on help
- Sell unused items: Old tech, clothes, or furniture can bring in quick cash via Facebook Marketplace, Vinted, or eBay
- Casual work or side jobs: Dog walking, babysitting, local delivery shifts, or selling baked goods can add modest but meaningful amounts
- Ask for more hours: If you’re working part-time, see if more hours are available before seeking a second job
Extra income is especially powerful when directed straight to high-interest debt or an emergency fund.
Even an extra £20 a week makes a difference.
Step 7: Talk to your creditors—don’t hide
If you can’t afford minimum payments, speak to your lenders. It’s scary, but they’d rather work with you than lose money through default.
Ask about:
- Temporary payment plans or reduced interest
- Breathing Space, a government-backed scheme giving you 60 days’ protection from further fees or legal action while you get advice
- Forbearance options, like freezing interest or allowing token payments
Lenders must treat you fairly under FCA rules. Being upfront shows you’re trying to solve the problem, which works in your favour.
Step 8: Build a £100 emergency buffer
It sounds small, but even a modest emergency fund, £100 to start with, can prevent new debt.
Without it, one unexpected bill can undo months of progress.
Set a goal to save just £5 or £10 a week. Keep the money in a separate account, out of sight.
Use it only for genuine emergencies: car trouble, a broken appliance, or urgent travel.
Once you hit £100, aim for £500. The peace of mind this brings can’t be overstated.
Step 9: Be kind to yourself—progress is rarely a straight line
Managing debt on a low income is hard. There will be setbacks, an unexpected expense, a missed payment, a bad week.
But don’t give up.
One bad month doesn’t undo the progress you’ve made. What matters is returning to your plan, adjusting when needed, and celebrating the small wins.
Remind yourself:
- You’re not failing. You’re navigating a tough situation with limited resources
- Slow progress is still progress
- Taking control of your money is a sign of strength, not weakness
You can move forward, even on a tight budget
Being in debt while earning a low income isn’t a personal failure—it’s often the result of systems, unexpected life events, or simply trying to get by.
But with practical steps and the right support, you can change the story.
Whether it’s building a bare-bones budget, prioritising the right debts, seeking free advice, or just having the courage to look at your statements, every action counts.
To recap:
- Write down exactly what you owe and who to
- Focus on priority debts first
- Create a stripped-down budget to find even small savings
- Pay off high-interest debts when possible
- Get help from free, non-judgmental UK services
- Increase income in small but steady ways
- Talk to lenders early if you’re struggling
- Save even a small emergency fund to protect future progress
- Be patient—this takes time, but it is possible
Debt can feel like a weight, but it doesn’t define your future. With the right approach, you can lighten the load—no matter where you’re starting from.
Here’s the checklist. Print it or copy and paste it so you can refer to it whenever you need to.
Checklist: How to manage debt on a low income
Use this checklist to stay on track. Tick off steps as you go, and revisit when needed.
1. Understand what you owe
☐ List all your debts (credit cards, loans, overdrafts, catalogues, etc.)
☐ Note the balance, minimum payment, and interest rate for each
☐ Identify which debts are priority (e.g. rent, council tax, utilities)
2. Prioritise urgent debts
☐ Focus on priority debts first (those with legal or essential consequences)
☐ Keep making minimum payments on non-priority debts (like credit cards)
☐ If you can’t afford everything, prioritise rent, council tax, energy, and fines
3. Create a barebones budget
☐ Write down your monthly income (after tax)
☐ List essential costs only (rent, food, bills, transport to work)
☐ Cut non-essentials where you can (unused subscriptions, takeaways)
☐ Use free tools like the MoneyHelper budget planner (moneyhelper.org.uk)
4. Choose a debt repayment strategy
☐ If possible, pay extra towards high-interest debt (avalanche method)
☐ Or pay off smallest debts first for motivation (snowball method)
☐ Stick with the method that helps you stay consistent
5. Seek free, professional debt advice
☐ Contact a free UK debt advice service:
- StepChange: stepchange.org
- National Debtline: nationaldebtline.org
- Citizens Advice: citizensadvice.org.uk
- Christians Against Poverty: capuk.org
☐ Ask about options like Debt Management Plans or Breathing Space
6. Look for ways to boost your income (even slightly)
☐ Check for benefits or support at entitledto.co.uk or turn2us.org.uk
☐ Sell unused items (clothes, electronics, furniture)
☐ Explore small side gigs (babysitting, cleaning, deliveries)
☐ Ask for extra hours or check for local part-time jobs if possible
7. Speak to creditors early
☐ Contact lenders if you can’t afford repayments
☐ Ask about reduced payments, frozen interest, or hardship support
☐ Mention the Breathing Space scheme if you’re seeking advice
8. Start an emergency buffer (even if it’s small)
☐ Open a separate savings account (ideally not linked to your debit card)
☐ Set a goal: £100 to start, then aim for £500
☐ Save a little each week—even £5 matters
9. Review and adjust regularly
☐ Revisit your budget each month
☐ Track your progress with debts and savings
☐ Celebrate small wins (like clearing a card or reaching your first £100 saved)
10. Be patient and kind to yourself
☐ Remind yourself that progress takes time
☐ Don’t give up after setbacks—they’re part of the process
☐ Focus on steady steps, not perfection
