4 Ways You Can Reduce Your Debt

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reducing your debts

No one likes being in debt. Most people want to get out of it, but it’s time consuming, and can be difficult, especially if you’re barely scraping by. But, if you acknowledge your debt, stop adding to it, consolidate if it’s in your favor, and you pay down bills smartly, you can reduce your debt.


First, acknowledge your debt. Get out the bills, sit down, and figure out exactly how much you owe. Do this down to the penny. You can’t reduce your debt if you don’t know what you owe. Factor in all your credit cards, store cards, student loans, car loans, house loans, and any other debt you have. Organize by type: short term, like credit cards, medical bills, and payday loans; medium term, like a 5 year car loan; and long term, like house loans. That way you know what can be paid off soon, and what’s going to take time.

Don’t Make It Worse

Next, stop adding to your debt. Paying $300 a month on your credit card, but charging up another $220 later that month means you’re only putting $80 per month towards reducing your debt. If you want to get serious, act the part. Figure out where your spending is going. Cut back on the things you don’t really need. If you can stop adding to your debt, you can help reduce it faster.


Next, consider consolidation, but only if it will benefit you. There’s student loan consolidation, which can help lower your interest rates, or give you more time to pay off the loans if you’re having trouble. There’s also a number of credit card applications offering a 0% interest rate for a fixed period of time if you open an account with them. Consider opening one of those accounts, if you’re able to pay off the promotional balance in time. Most of them will keep record of the amount of interest accrued, and if you don’t pay in full by the due date, it all gets added onto your credit card balance.

Pay Them Off

Last, pay down bills smartly. If you have a promotional offer, or a bill that must be paid off faster, put extra money towards those. If you don’t have bills with pressing due dates, then decide if you want to pay off the smallest bill first, or the one with the highest interest rate. Experts disagree on which one has the best effect, since seeing small bills go away is good for your self esteem, but highest interest rates are good for the bank account. Choose which you prefer, and stick with it.

It’s possible to reduce debt if you realize what debt you have, stop adding to your debt, consolidate when it benefits you, and have a plan to pay off your debts. Millions of people have managed it, it just takes some dedication.

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