How to Get Out of Debt on a Low Income: Why Smart People Stay Trapped, and the First Psychological Steps

If you are searching for how to get out of debt on a low income, you may be one of the most capable people you know. You can run a department, manage a whole family’s paperwork and solve other people’s problems in minutes. Yet the one problem you can’t seem to solve is the one that wakes you at 3am: the qarza. The credit card, the money borrowed for a wedding, the loan from a cousin, the app that keeps calling.

You have probably already been told to “make a budget” and “stop spending”. That advice assumes the problem is a lack of information. For most capable people, it isn’t. Debt changes how a mind works under pressure, and the first steps out are psychological before they are financial. This guide explains why smart people stay stuck, gives you seven steps you can start this week, and covers loan-app harassment in Pakistan and where to report it.

A note before we start: I am a psychologist, not a financial adviser. This article is about behaviour and the stress around debt. It is not financial, legal or investment advice, and it doesn’t tell you which loan to repay, refinance or take. For those decisions, speak to a licensed financial professional or a lawyer in your country.

Debt can feel crushing. If it has brought you to thoughts of ending your life, please pause here and talk to someone today. You deserve support, and people do come through this.

Need help right now? If you might harm yourself or someone else, or you are in danger right now, call your local emergency number or go to the nearest emergency department.

• Pakistan: Umang mental health helpline 0311 7786264; in an emergency, police 15 or Rescue 1122
• Saudi Arabia: emergency 911; counselling line 920033360 (8am–8pm, Saturday 1pm–8pm; not 24 hours)
• India: Tele-MANAS 14416 or 1-800-891-4416 (emergency 112)
• Bangladesh: Kaan Pete Roi +880 9612-119911 (3pm to 3am daily)
• United States: 988 Suicide & Crisis Lifeline, call or text 988 (24/7)
• Canada: 9-8-8 Suicide Crisis Helpline, call or text 988 (24/7)
• UK and Ireland: Samaritans 116 123 (free, 24/7)
• European Union: emergency number 112
• Anywhere else: call your local emergency number, or find a free helpline at findahelpline.com.

It isn’t a brains problem: what scarcity does to a good mind

Researchers who study scarcity have a useful idea: when you have too little of something, that shortage takes over your attention.

In a series of experiments, Anuj Shah, Sendhil Mullainathan and Eldar Shafir found that scarcity changes how people allocate attention. They engage more deeply with the problem in front of them and neglect others, and the authors argue this can help explain behaviours such as overborrowing (Shah et al., 2012). The urgent bill gets all your focus. The cost of the loan you take to pay it gets almost none.

A related paper went further. When poorer participants were asked to think about a financial problem, their scores on cognitive tests dropped. Better-off participants didn’t show the drop. The same team also tested farmers before and after harvest: the same farmer did worse on cognitive tests before harvest, when money was tight, than after it (Mani et al., 2013).

To be honest about the science: not every study agrees. When researchers surveyed low-income households in the United States just before and just after payday, they found no difference in cognitive test performance. They did find that people chose more for “now” over “later” with money before payday (Carvalho et al., 2016). So how big this “mental tax” is remains debated. But the research points the same way on one thing: when money is short, the choice in front of you feels more urgent, and “abhi” beats “baad mein”.

The takeaway is simple. You are not stupid. You are solving problems under pressure. The steps below are designed to work with a stressed brain, not against it.

Five traps that keep capable people in debt

1. Not looking (the ostrich effect)

Behavioural economists call it the “ostrich effect”. In two datasets of investors in Scandinavia and the United States, people checked their accounts more often when markets were rising than when they were flat or falling (Karlsson et al., 2009). Most of us do the same with bad money news. We stop opening the banking app, leave the envelope sealed and let calls ring out. Avoidance buys a few hours of calm, while the fear, and sometimes the balance, keep growing.

2. Borrowing to put out today’s fire

When the rent is due on Thursday, a new loan that covers it feels like a solution, because it ends today’s emergency. This is the tunnel that scarcity creates: the cost lands in a future you are not able to look at yet. This is how one manageable debt can turn into several unmanageable ones.

3. Shame and secrecy

“Log kya kahenge?” Shame keeps people from telling a spouse, asking a lender for time, or getting advice. It also isolates you, so every decision is made alone, at night, under stress. Secrecy doesn’t make the debt smaller. It only makes you the only person carrying it.

4. The weight of being “the one who manages”

Many of us are the earner the family relies on: the son working in the Gulf, the daughter whose salary pays the school fees, the brother who “can’t say no”. Remittances, shaadi costs and family emergencies are real obligations, and saying no feels like failing them. If spending pressure and “log kya kahenge” are part of how the debt built up, my guide to the psychology of money and why you overspend goes deeper into those patterns.

5. All-or-nothing thinking

“If I can’t clear it all this year, what’s the point?” This thought quietly ends many repayment efforts. Research on people in a debt programme suggests that small, completed wins matter. In data from a debt settlement firm, closing individual debt accounts predicted getting out of debt, regardless of how large the balances on those closed accounts were. The authors suggest that finishing discrete subtasks may help people keep going towards the larger goal (Gal & McShane, 2012).

A composite of common situations (not a real client). Imran, 37, is an accounts officer in Jeddah. At work he reconciles thousands of riyals a day without a mistake. At home there is a credit card, a personal loan he took when his sister got married, and money he borrowed from a friend to cover his father’s hospital bill in Faisalabad. Every month he sends money home first and hopes the rest will work out.

For a year he stopped opening his banking app. He told his wife things were “under control” and slept badly. One evening he wrote every debt on a single page. The total was smaller than his fear, and larger than he had admitted. He showed the page to his wife. Together they called the bank to ask what options existed, and he had a hard conversation with his parents about sending less for six months. He also took a distress screening test, saw that his score was high, and booked an appointment with his doctor.

Nothing about his salary changed in the first month. What changed was that he stopped hiding.

How to get out of debt on a low income: your first seven days

This is not a financial plan. It is a way to get your mind working for you again, so that the financial decisions, with proper advice, become possible. Each step takes 20 to 40 minutes.

1. Day 1: Look. Set a timer for 25 minutes. Open every statement, app and message. On one page, write each debt: who you owe, how much, the minimum payment, the due date, and what the agreement says happens if you miss it. Looking is the hardest step, so give yourself a small reward afterwards: chai, a walk or a call with a friend.
2. Day 2: Separate the fear from the facts. Write down your worst thought (“Sab ko pata chal jayega”, “We will lose everything”). Next to it, write only what you know for certain from Day 1. Fear speaks in absolutes, while the page shows you numbers and dates.
3. Day 3: Stop the bleeding. Set one rule for the next 30 days: no new borrowing to pay old borrowing without first talking it through with someone you trust or a licensed adviser. Add friction: log out of lending apps and remove saved cards from shopping apps.
4. Day 4: Make “if-then” plans. In a review of 94 tests, plans that spell out when, where and how you will act (“If situation Y happens, then I will do X”) had a medium-to-large effect on reaching goals (Gollwitzer & Sheeran, 2006). Write three, for example: “If my salary arrives, then that same evening I move the amount I have set aside for the debt before anything else.” “If a relative asks me for a loan, then I say, ‘Let me check my commitments and tell you on Sunday.'” “If I feel the urge to check the balance again, then I check once, at 9pm.”
5. Day 5: Choose one small win. Pick one debt you could realistically close soonest, and make it your first finish line. This is a motivation point, not a repayment recommendation. Interest, penalties and legal risk also matter, and a financial professional can help you decide the order.
6. Day 6: Have one honest conversation. This could be with your spouse, one trusted person, or a lender. A simple script: “I want to pay this. My income is X, and I can manage Y a month. What options do you have? Please send them to me in writing.” After every call, note the date, the person’s name and what was agreed.
7. Day 7: Check your own load. Take the free K10 stress and distress test. The K10 is a 10-question scale developed to screen for psychological distress in the general population (Kessler et al., 2002). It is a screening tool, not a diagnosis. A high score is a reason to talk to a doctor or a mental health professional, not a verdict on you.

How to get out of debt when you are broke

Sometimes there is nothing left to cut. If your income only just covers food, rent, transport and medicine, “skip your morning coffee” advice is insulting. Here, the psychology shifts.

• Make the essentials visible. List what your household truly cannot go without each month. This isn’t about choosing which bill to pay; it’s about seeing clearly what is left, so you stop making the same painful decision every day.
• Separate your worth from your balance. Debt is a situation, not a character trait. Treating it as a personal failure feeds the urge to hide, and hiding is the trap.
• Look after the person carrying it. A review of 65 studies found that people with more severe unsecured debt tended to have worse mental health, including higher rates of depression. The authors note that cause and effect are hard to separate (Richardson et al., 2013). Either way, sleep, meals and a little movement are not luxuries when you are under this kind of strain. They are what keep your decisions clear.
• Talk honestly with family about what you can send. You could try: “Ammi, Abbu, I will keep sending what I can, but for the next few months it will be less. I’m clearing a qarza so that I don’t fall into a bigger one.” Saying it early gives your family the chance to plan with you, instead of discovering a hidden crisis later.
• Grow income carefully. If you are looking for extra income, my guide to honest ways to make money online explains what tends to work and what to avoid. Be wary of any “earning” scheme that asks you to pay first.

Some debts can’t be solved with willpower and need a formal arrangement with lenders, or legal advice. Reaching that point isn’t failure. It is taking the problem seriously.

Loan apps in Pakistan: harassment, your rights and where to report

Many people search for “loan apps in Pakistan” when they’re in a tight spot. This article names no apps. Instead, here is how to check any lender, and what the rules say.

Check the whitelist first. The Securities and Exchange Commission of Pakistan (SECP) publishes a white list of digital lending apps run by licensed lending companies. On October 17, 2026, the latest version was dated September 11, 2026. If an app is not on the list, SECP has not approved it.

Know what a licensed app may not do. Under SECP’s Circular No. 15 of 2022, as summarised in the government’s own press release:

• Before the loan is paid out, you must be given a Key Fact Statement showing the amount, the annual percentage rate, the term, the instalments and their dates, and all fees and charges, in both English and Urdu. A fee not included in it may not be charged.
• The lender may not access your phone book, contact list or photo gallery, even if you gave consent.
• The lender may not contact people in your contact list, other than guarantors you named who also gave their consent when the loan was approved.

If you are being harassed:

• Don’t argue on calls. Save the evidence: screenshots, numbers, call logs, voice notes and dates.
• Consider telling one trusted person what is happening before anyone else hears about it. Threats of “exposure” can lose much of their power once the people closest to you already know.
• If anyone threatens to hurt you or your family, treat it as an emergency and call the police on 15.

Where to report (each page checked on October 17, 2026):

• Licensed lending companies and apps: SECP’s complaints page asks you to raise the issue with the company first, then submit a complaint online through the “Submit your complaint” button on SECP’s home page, or by fax or post. For questions, SECP’s toll-free line is 080088008 (free from a landline only).
• Threats, blackmail or misuse of your photos and contacts online: the National Cyber Crime Investigation Agency (NCCIA) helpline is 1799, as announced by the Interior Minister (Press Information Department, 2025).
• Banks and microfinance banks: the State Bank of Pakistan’s Sunwai portal lets you lodge a complaint with the bank first, then with the Banking Mohtasib, and with the State Bank itself in certain cases.
• In Saudi Arabia: banks and other financial institutions supervised by the Saudi Central Bank (SAMA) are required to handle customer complaints through SAMA’s Complaints Management System within set time limits. Start with the institution, and escalate if the response doesn’t resolve it.
• Anywhere else: your central bank or financial regulator, and the police cybercrime unit, are the right places to report.

When debt starts to feel hopeless

Research has linked debt with thoughts of suicide, and feelings of hopelessness partly explain that link (Meltzer et al., 2011). If you recognise that feeling, please hear this: hopelessness is the weight talking, and that weight can change. Debts can be renegotiated, timelines stretched and the load shared. Your life cannot be replaced.

If you have started thinking that your family would be better off without you, or that there is no way out, treat it as urgent. Call one of the helplines near the top of this page, or your local emergency number, today. Tell one person you trust. You don’t need to have a plan for the debt before you ask for help for yourself.

Qarz, dua and the weight of shame

Many people search for “qarz se nijat ki dua”. For many families, faith is a real source of strength in hard times, and this article doesn’t offer religious guidance; for that, please speak to a scholar you trust. What psychology can add is practical: steps you can take alongside your prayers, and permission to ask for help without shame.

Common questions

Is it possible to get out of debt on a low income?
It depends on your numbers, and no article can promise an outcome. It is usually slower than people would like, and some situations need a formal arrangement with lenders or legal advice. The psychological part is the same either way: look at the full picture, stop hiding, make small specific plans and get support.

Should I take a new loan to pay off my old ones?
That is a financial decision this article can’t make for you. Psychologically, notice whether the new loan ends a long-term problem or only today’s emergency. Before you sign anything, get the full terms in writing, and if you can, speak to a licensed financial professional.

A loan app is threatening to message my contacts. What can I do?
Under SECP’s Circular 15, licensed digital lenders may not access your contacts or contact the people in them, other than consenting guarantors. Save the evidence and report it to SECP and, for threats or blackmail, to NCCIA on 1799.

Does money stress count as a mental health problem?
Stress about debt is a normal reaction to a real problem. But if low mood, anxiety or poor sleep have lasted two weeks or more, or are affecting your work and family life, it is worth speaking to a doctor or a mental health professional. The K10 test can help you see where you are.

If you would like to talk this through with me, you can book a consultation. Consultations are educational and supportive. They are not a replacement for emergency care, financial advice or legal advice. You can find more practical guides in the Money section.

Last reviewed: October 2026. To see how articles on this site are researched and checked, read the editorial policy.

References

1. Shah AK, Mullainathan S, Shafir E. Some consequences of having too little. Science. 2012;338(6107):682-685. https://doi.org/10.1126/science.1222426 (PubMed 23118192)
2. Mani A, Mullainathan S, Shafir E, Zhao J. Poverty impedes cognitive function. Science. 2013;341(6149):976-980. https://doi.org/10.1126/science.1238041 (PubMed 23990553)
3. Carvalho LS, Meier S, Wang SW. Poverty and economic decision-making: evidence from changes in financial resources at payday. American Economic Review. 2016;106(2):260-284. https://doi.org/10.1257/aer.20140481
4. Karlsson N, Loewenstein G, Seppi D. The ostrich effect: selective attention to information. Journal of Risk and Uncertainty. 2009;38(2):95-115. https://doi.org/10.1007/s11166-009-9060-6
5. Gal D, McShane BB. Can small victories help win the war? Evidence from consumer debt management. Journal of Marketing Research. 2012;49(4):487-501. https://doi.org/10.1509/jmr.11.0272
6. Gollwitzer PM, Sheeran P. Implementation intentions and goal achievement: a meta-analysis of effects and processes. Advances in Experimental Social Psychology. 2006;38:69-119. https://doi.org/10.1016/S0065-2601(06)38002-1
7. Kessler RC, Andrews G, Colpe LJ, et al. Short screening scales to monitor population prevalences and trends in non-specific psychological distress. Psychological Medicine. 2002;32(6):959-976. https://doi.org/10.1017/S0033291702006074 (PubMed 12214795)
8. Richardson T, Elliott P, Roberts R. The relationship between personal unsecured debt and mental and physical health: a systematic review and meta-analysis. Clinical Psychology Review. 2013;33(8):1148-1162. https://doi.org/10.1016/j.cpr.2013.08.009 (PubMed 24121465)
9. Meltzer H, Bebbington P, Brugha T, Jenkins R, McManus S, Dennis MS. Personal debt and suicidal ideation. Psychological Medicine. 2011;41(4):771-778. https://doi.org/10.1017/S0033291710001261 (PubMed 20550757)
10. Securities and Exchange Commission of Pakistan. White List of Digital Lending Apps, as of September 11, 2026. https://www.secp.gov.pk/document/digital-lending-apps-being-run-and-administered-by-duly-licensed-lending-nbfcs/
11. Securities and Exchange Commission of Pakistan. Circular No. 15 of 2022: Requirements for NBFCs engaged in digital lending. https://www.secp.gov.pk/document/circular-no-15-of-2022-requirements-for-nbfcs-engaged-in-digital-lending/
12. Press Information Department, Government of Pakistan. SECP issues digital lending standards (press release, December 28, 2022). https://pid.gov.pk/site/press_detail/21745
13. Securities and Exchange Commission of Pakistan. Complaints. https://www.secp.gov.pk/for-investors/complaints/
14. Press Information Department, Government of Pakistan. Federal Interior Minister visits headquarters of NCCIA (press release, June 3, 2025). https://pid.gov.pk/site/press_detail/29307
15. State Bank of Pakistan. Sunwai Customer Complaint Portal: About this portal. https://sunwai.sbp.org.pk/about-us.html
16. Saudi Central Bank (SAMA) Rulebook. Launch of the first phase of the Complaint Management System. https://rulebook.sama.gov.sa/en/launch-first-phase-complaint-management-system

This article is for education only. It is not financial, legal or medical advice, and it is not a substitute for professional care.

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Dr. Malik Sherjeel Awan

Dr. Malik Sherjeel Awan is a clinical psychologist based in Makkah. PsyD (Clinical Psychology), University of Karachi.
He writes practical, evidence-based psychology for everyday life.

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