I'm 39 and saddled with $25K in student loan and credit card debt. The monthly payments are absolutely crushing me — I don’t even have any retirement savings. How do I manage this mess?

When most people are in their 30s, there's a lot of pressure to be in good financial standing. But what if you’re $25,000 in debt from a mix of student loans and credit card balances, and you only make $4,000 a month?

If those monthly payments are stretching you thin, that likely means you haven’t even started saving for retirement. Although it’s a fairly common situation, and can feel overwhelming, there are ways to turn things around.

In August 2024, Equifax Canada’s Market Pulse Consumer Credit Trends and Insights Report found that consumer debt levels rose to $2.5 trillion in the second quarter of 2024; this is a 4.2% increase since the same quarter in 2023. Card holders carry over $4,300 in credit card balances on average, which is the highest level since 2007

So no, you’re not alone — but it’s time to make a plan. Here are three strategic options to help dig yourself out of debt and start building a better future.

Prioritize and simplify your debts

When you're juggling multiple debts, the first step is to organize and prioritize.

Start by separating your high-interest debt — typically your credit cards — from your lower-interest student loans. You may want to explore the following options:

• Use the avalanche method. Focus on paying off the debt with the highest interest rate first while making minimum payments on the rest. This reduces the total amount you’ll pay over time. As one balance is paid off, redirect those payments to the next highest-interest debt.

• Consider a debt consolidation loan. Even if your credit score isn’t very good — that is, below 660 according to Equifax — you may still qualify for a personal loan with a lower interest rate. You can use it to consolidate your credit card balances into one monthly payment, ideally at a fixed rate. Just be sure to avoid adding new credit card debt during the payoff process.

• For student loans, look into federal repayment programs. If your federal student loans are unmanageable, see if you are eligible for the government’s Repayment Assistance Plan.

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Rebuild breathing room in your budget

You don’t need to suffer endlessly, but you do need to restructure your spending. Start by creating a simple budget with breathing room.

Every dollar should have a purpose, whether it’s rent, food, debt or savings. Here’s how to find extra space:

• Pause or cancel non-essentials. Think subscriptions, takeout or unused memberships.

• Renegotiate bills. Call your internet, phone and utility providers. Many offer promotions or hardship plans.

• Use an app to track spending. Net worth tracking apps like You Need a Budget make it easy to see where your cash is going.

• Add a side hustle. Things like freelancing, tutoring and rideshare driving can bring in extra cash. Even an extra $200 a month can make a big difference when applied to debt.

Start saving for retirement — even just a little

It’s tempting to delay retirement savings until you’re out of debt, but even small contributions now can compound significantly over time.

You can start by opening a Tax Free Savings Account, which provides a tax-free shelter to grow your wealth while offering flexibility if you need to withdraw your money at any time.

Sources

1. Equifax Canada: Economic Pressures Could Impact Credit Performance of Consumers, Especially Young Adults (Aug 27, 2024)

2. Equifax Canada: What is a good credit score?

3. Government of Canada: Repayment Assistance Plan- How it works