How to Pay Off Debt: Increase Income or Decrease Expenses?

                                                                                                                                                                                                                                           Source: via Lindsay on Pinterest

When we made the decision to pay off our debt, we were faced with a decision: What’s the best and fastest way to do this - should we decrease our expenses or increase our income?  Yes, I know – the default answer is “both,” and we’re definitely working on each one. My question, though, is this: if you had to choose one, which would you say was more important?


There are different schools of thought on this subject, so I thought I would do a little research into the pros and cons of each “method.”


Increase Income

Popularity: 60,500 people searched for the phrase “increase income.”  It’s a popular subject. Everyone wants to know (easy) ways to make more money.  There are almost 5 million search results for that phrase.

Con: Increasing your income may not have an immediate affect on your budget.  You may be investing time into something that won’t pay off until later (2 weeks, 2 months, 2 years).

Con: Increasing your income is not always in your control.  It may depend on your salary level, the economy, job availability or the amount of work that is available, or a number of other factors that you aren’t able to govern.

Pro: Increasing your income is limited only by your desire to work hard. “The sky’s the limit.” Though this might require changing jobs, moving, putting in more hours than you want to, there will always be something work you can do to make money.

Pro(?): Prestige. This is incredibly shallow, but it’s a fact of our culture and society – people who make more money are looked at as more successful. They seem to have it “more together” than the rest of us.  But I’m not sure about this once (hence the “?”).


Decrease Expenses

Popularity: Compared to 60.5 MILLION searches for “increase income”, there are a measly 6,600 searches for “decrease expenses.” This is obviously the less popular solution for getting out of debt.  There are a little  over 4 million results for this phrase.

Pro: Cutting expenses will have an immediate impact on your budget – one that’s obvious and easy to see on paper.  Assuming you put the money you save immediately towards your debt and don’t blow it somewhere else in your budget, you can see an impact right away when you cut expenses.

Pro: This one is fully in your control.  You don’t HAVE to have cable, Netflix, or a gym membership. You can look for ways to lower your grocery bill, drive less to save gas, cancel magazine subscriptions. Might not be fun, but they are all things within your power to do.

Con: This one is limited – there really is only “so much” you can decrease your expenses.  You have to pay utilities, rent or mortgage, you have to buy food.  Once you’ve cut everything else to the bone, you may find you’ve cut as much as you can.

Con: Not spending money can make you look “cheap.” This is another superficial one, but to be honest, this is one area I struggle. As a culture, we spend money socially.  To get together, we meet at restaurants. If we have a party, everyone brings something (especially at Christmas time!).  We take our kids to play miniature golf, or to McDonalds, or a hundred other things that cost money. When you go on a “spending strike” and choose not to spend money on these things, you either don’t get to participate, or you do so in some modified way that makes it obvious to everyone around you that you’re not spending money.  (Bringing a sack lunch to the McDonald’s playdate? Drinking water at the restaurant? Being the only one to bring a homemade ornament to the ornament exchange…?)


Ultimately, the point G.K. Chesterson was making wasn’t a fiscal one. He was talking about a heart matter of contentment with the things that you have instead of a constant desire for more.  These lessons definitely need to be learned by all of us in our consumer-driven culture.  But while we’re learning, we also have some practical, budgetary decisions to make.


So what do you think? Increase your income or decrease your expenses? Vote in the comments – and don’t say “both”.

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One Response to “How to Pay Off Debt: Increase Income or Decrease Expenses?”

  1. sebastian says:

    The biggest secret is to do a combination STOP&REDUCE- Stop spending on things that are not needed as that will help your debt from growing. The next part is to try to reduce your living expenses as much as possible. Increasing salaries gives a false sense that the incurred debt is a result of low salaries, not over spending. Also, on your other post about minimum payments and how not to miss them, have you tried to have automatic payments through your bank to avoid late fees?

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