Half of Workers Rely On Debt To Buy Essentials — Here’s How To Avoid Falling Into Survival Debt
Written by
Jordan Rosenfeld
Edited by
Molly Sullivan
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Budgets are stretched so thin that many workers are putting basics on credit. A recent Zety survey finds 48% of U.S. workers relied on debt to pay for essentials like groceries and 88% of side gig workers picked up more work just to afford essentials. That kind of survival debt can snowball as interest and fees pile up — but there are practical ways to stop it.
Finance experts walked through immediate steps to cover necessities, cut recurring costs and keep food on the table without taking on new debt.
Take These Immediate Steps
While every household’s finances will vary, consumer finance expert Austin Kilgore, analyst with the Achieve Center for Consumer Insights, recommended doing the following things immediately to try and get back on track:
- Prioritize paying for necessities, which are shelter, food and utilities.
- Pay at least the minimum on any secured debts, like housing or a car so you don’t lose either of these essential things.
- Then, prioritize high-interest credit card and other debt, even if you must pay the minimum.
Melanie Musson, an insurance and personal finance expert with Clearsurance.com, added:
- Find out if you’re eligible for your state’s Supplemental Nutrition Assistance Program (SNAP) program.
- Create a shopping list of the ingredients you need to prepare the meals you have planned and only buy those.
- Ask for overtime at work.
- Put a spending freeze on nonessentials.
Watch For Warning Signs
If your debt increases every month, you’re going into survival mode, Musson said, “and you need to immediately increase your income and decrease your spending.” Every dollar counts when the balance is so delicate.
Kilgore suggested some warning signs to watch for that you may be getting in over your head, such as:
- Only making minimum payments (or an inability to make them at all)
- Getting calls from collectors
- Juggling credit cards or other debt (like BNPL loans) to pay for necessities (food, housing, utilities) or other debts (e.g., auto loan)
- Falling behind on any monthly payment
Track Your Spending
From there, you need to be able to see “exactly what you have coming in and going out,” so you can find the places to adjust, Kilgore insisted.
He recommended creating a spending log, or just holding onto receipts, for several weeks to really determine your patterns of spending and thus the areas where it will be easiest to cut back. Big expenses like housing should not be more than 25% of your income.
Grocery and Meal Planning Tips
Since groceries are among the biggest expenditure for many families after other fixed expenses, doing whatever you can to save money here is a good idea. Kilgore recommended such tips as:
- Meal planning and shopping accordingly
- Using up food you already have (even canned and frozen)
- Shopping with a list
- Shopping for discounts and clearance items
- Eating what’s in season when possible
Don’t Let Debts Go To Collection
While you want to prioritize your basic needs, you also do not want any debts to go to collections, Musson insisted. “That’s a nightmare to deal with. It’s not a pleasant process, and you’ll incur fees and penalties.” So, try to pay your minimum payments until you can get ahead of debt.
Sell Items
If you own more things than you need, Kilgore suggested organizing and selling unneeded items online (or hold a yard sale). Clean out drawers, closets, basements, attics and garages. If you pay for a storage unit, “organize, sell, donate or throw out the contents you can’t use, and close it” to save monthly.
Cut Out Brand Name Products
If you’re having trouble making ends meet, switch to generic products. “You’ll save 10% to 20% or more with store-brand products,” Kilgore said.
Cancel Subscriptions
There’s a time to cut back, and a time to cancel subscriptions. If you can’t afford food, cancelling subscriptions you don’t use could save the average person $30 a month, Musson said. “Then, you can start cutting out subscriptions you do use, but not as often, and you could save another $15 to $30 a month.”
Avoid New Debt, Including BNPL
Do whatever you can to avoid taking on new debt for essential expenses, even buy now, pay later loans (BNPL), Kilgore explained. “In a study my company did, we found that 78% of BNPL users acknowledge that BNPL loans make it easy to get over-extended financially.”
Since BNPL payments have different due dates, and at two-week intervals versus monthly, this can be a complicated challenge for even a very organized person, he explained.
Look Into Assistance Programs
If you are struggling to the point of racking up debt to pay for groceries, look into government programs like the SNAP program or Women, Infants and Children (WIC) program, Kilgore said. “Nutrition.gov and USA.gov provide more information on these programs. You can also find help from a local food bank.”
Credit Debt Management Plans
If you simply can’t get ahead of your debt, consider debt management plans (DMPs) through credit counseling agencies, Kilgore said. “These plans do not directly help with paying for groceries; they are designed to help people lower the interest rate on a credit card account in the hope that the change will enable them to make monthly payments more easily.”
Make a few focused moves now and you can keep food on the table without feeding survival debt.
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