Get out of debt on an entry-level salary without losing your sanity

When you're living on an entry-level salary, figuring out how to get out of debt may be the last thing on your mind, but it should be your first priority.

It's not that tackling your debt isn't important, but there's always more urgent, day-to-day stuff to handle first. Rent and bills don't stop coming because your account's getting low. In fact, isn't that when bills seem to pile up? Don't forget costs that are technically luxuries, like nights out with your friends.

So your debt quickly becomes one of those things you say you'll handle later ... and then keep telling yourself that until you're old and grey.

But look. It doesn't have to be that way. I'm not saying getting out of debt is easy, but it's a goal worth getting excited about. Here's how to make it work on any income.

Pay off debt now, not later

The first few years after graduation can make or break your finances. They're when you set habits, good or bad, that can be hard to change later. But if you're struggling to get it right, you're not alone.

Many Canadians delay paying off their student loans. Why? Low earning power right out of college or university is the most common answer. Roughly two-thirds of Canadians graduate with student loan debt, and many say the main reason they put off paying it down is the high cost of living compared to their income.

It's likely your earning power will grow later in life. That's great, but your other financial responsibilities will grow, too. Getting married, buying a home, having children, and other major life events come with hefty price tags.

Bottom line: what you pay to live your life right now is as low as it's ever going to be. Even if your paycheque doesn't have quite as many zeroes on the end of it as you'd like, this is the best time to get out of debt.

Make a plan to get out of debt

The key to winning the debt game is to get your playbook in order. Here are the two fundamental pieces you'll want to put in place.

Make a budget

What's the first step toward paying off debt? Well, any good financial plan starts with budgeting. Go ahead and take a second to get over your shock and regain your composure.

OK, you probably aren't surprised to hear that a budget should come into play. Budgeting isn't exactly an insider secret, but it's also not what most people want to spend a Saturday doing. Making a budget involves two of the worst things in the world: math and coming face to face with how much you spent online after one too many glasses of wine. You won't make meaningful progress without it, though. Plus, it helps you track where your money is going so that you can prioritize the things that matter most.

Budgeting doesn't mean sacrificing all your favourite things; it should help you be responsible with how you live your life, not get in the way of actually living it. Any budget that forces you to stay in every weekend and eat nothing but instant noodles won't work. You'll be miserable, and your budget will be in the trash before the month is done. Even if it's just a little money every month for drinks out with friends, budgeting in the fun stuff is the only way to meet your debt repayment goals.

Pick a debt payment strategy

Now, say you have credit card debt, a new car loan, and student debt. Once you know how much you can afford to pay toward your debts, how do you choose which debt to pay off first?

There are two primary strategies used to tackle debt: the snowball method and the avalanche method (sometimes called the stacking method).

The snowball method of debt repayment prioritizes small debt first. The logic behind this strategy is that by paying off several smaller debts quickly, you'll gain the momentum needed to deal with the larger debts.

If you choose the avalanche method, you'll start by tackling the one with the highest interest rate. This may not help you build momentum, but it will keep the total amount of money you'll ultimately pay as low as possible. Once you've paid off your first debt, move your budgeted debt repayment funds to the debt with the next highest interest rate. As you make progress, don't mind that strange sensation in your gut. It's just the satisfaction of mastering your money.


Tackling your debt on an entry-level salary is like playing a high-stakes game of Jenga. To pay it off, you have to pull money from another area of your budget, cross your fingers, and hope the whole thing doesn't collapse. That doesn't mean it's impossible to win, though. Sure, you can go the rest of your life making minimum debt payments, but that's money leaving your pocket every month that could go toward a house, an emergency fund, or even a vacation.

So seize the day. Then relax tomorrow.