Managing Your Way Out of Debt On a Single Income

Paying your debt such as student loans or a mortgage is no easy task, but doing so on a single income, is even more challenging. If you are responsible for the bills every month and you dream about getting out of debt, you can try adapting a management tool that rebuilt Japan after WWII. Called the Deming cycle or PDCA, this is an iterative approach to solve problems.

PDCA (Deming cycle)

The acronym PDCA stands for the actions: plan, do check, act and repeat. This is a way to design your debt repayment step by step. The difference from other approaches is that this framework gives you a dynamic and adjustable way to deal with the problem, which ensures a quick rebound in the case of derailments. Let’s discuss each step of the process and see how it can help a single income person or even family to become debt free in a few months or years, instead of a lifetime.

Plan your attack

You need to think the problem like an army general. Count your troops (income) and that of the enemy (debt). The numbers alone will not win the war. You need to get tactical and consider interest rates, repayment terms, and any default payments. Get organized and create a budget, by listing all your expenses and dividing them into categories. Use a spreadsheet to compute the percentages of each group. This division will help you identify the problematic areas. Make sure you make a clear difference between necessities (eating) and spoiling yourself (eating at an expensive restaurant).

Next, think about the method you will use to attack debt. The two main possibilities are avalanche and snowball.

The avalanche method

Use your spreadsheet and organize your debt in a decreasing order sorting by the interest rate. Plan to pay the highest ranked first and to continue following the indicated order. The advantage of this method is that you save money in the long run. Cutting the time for which you pay interest usually means thousands of dollars in your pocket. The downside is that it takes much determination since there are no quick wins.

The snowball method

Those motivated by immediate gains should do a different sorting. Just sort your debt value increasingly and start with the lowest amounts, working your way up the debt mountain. This is a good approach for people who are buried in debt due to bad spending habits and need time to adjust to the new life.

Do the unthinkable

Armed with your plan, start the implementation phase, one cent at a time. You might have come to the conclusion that your current income will never cover the payment. It is just time to get creative and list all the things you are good at. Don’t be afraid to get into the gig economy, to downsize and to embrace minimalism.

Part time jobs

Be inspired by others’ success stories and take advice from those who cleared their debt. Waiting tables, babysitting or dog walking are not just for high-school kids. You can earn up to $500 a month from doing part time such activities. If you are a master of words, try starting a blog or lending your proofreading services to authors. No job is too small or reason to be ashamed. Stay at home parents can help their partner by taking on any activity that could prove lucrative, such as craft work or looking after other people’s children in a sort of daycare.

Downsizing & minimalism

Overspending is most of the time a result of living larger than necessary. Ask yourself and your family if you need all that space and all the items filling it. Sort everything and organize a garage sale or use craigslist to get rid of ballast. Invest all the money in paying your debts right away. If you have trouble selecting the items you need, you can use Mary Kondo’s way of reducing clutter.

If you have trouble selecting the items you need, you can use Mary Kondo’s way of reducing clutter. Embrace a minimalist way of life, which is simple, requires less time and less money. People who made this transition not only got out of debt but were able to save and afford to live their dreams, focusing less on material possessions.

Selling your house might sound like a huge sacrifice, but if you are living above your means, it is a small one. The luxury car, motorbike, gym equipment or even electronics get in the same category.

Check your progress

At the end of each month take 10-15 minutes to track your achievements. Treat your debt repayment task as a business manager. Tick the areas where you have done well and reevaluate those where you fell short of the target. Be honest with yourself and decide if the spending that has offset your budget were necessary, such as out-of-pocket for healthcare or indulgences.

Create a system to keep yourself motivated and put a small percentage of your savings in a “bonus” jar. When you manage to hit the target  3-6 months in a row your, get yourself a little present.

To remain realistic, compute the difference between the actual repayment and the projected one. If you are more than 10% of the track, rethink your strategy, get new income streams or lengthen your projected time-span.

Act fast, act sharp

This last step is a continual improvement of the process and revolves around applying what you have learned in your journey to becoming even better. When it comes to paying your debt, mistakes are inevitable and the money lost should be a lesson learned.

At this time you should already have a good understanding of what you are doing good and what needs to be improved. Use apps, software or simple pen and paper to come up with ideas of how you can do better. List any corrective actions you need to take such as walking more to save on gas, making gifts instead of buying and so on. Become more passionate about saving and invest in your financial education.

To avoid transforming your debt repayment journey into an ordeal try to make it fun for the whole family. Think of it as a game and invent rewards for “the week’s biggest saver.” Learn to negotiate and take no price for granted, neither from your bank or your utility provider.


Borrowing management principles from large companies can help you and your family be better with finances. The whole idea is to take it on step at a time, have a plan and stick to it as long as it makes sense. If your initial estimations were too strict, loosen them after 3-6 months. Ideally, as you become more skilled in saving you should set higher targets.

Keep in mind that this is a process and you should regularly check to see if you are doing the right thing. Don’t be afraid to adjust on the go. Don’t even think about outsider’s opinions, just keep focused. To encourage yourself, just think of Elon Musk, who at 17 lived on a dollar a day to see if he can face the challenges of being an entrepreneur.


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