Six Steps to Reducing Your Debt

It’s never too late to implement changes and work toward debt freedom; here are some tried and true ways to start your journey:

1. Automate payments. Automating minimum payments plus an additional amount you can afford ensures you will never miss a debt payment and accrue a late fee. You can also pay more during the month to lower your balance if you want to use a “snowball” or “avalanche” strategy. A snowball strategy is where you pay off debt in order of smallest to largest, and an avalanche strategy is where you pay off the debt with the highest interest rate first.
2. Build up your emergency account. Building up your emergency account gives you a level of assurance that you won’t need to borrow money if and when an emergency arises. Make sure you’re putting some money toward your emergency account while you’re paying off your debts to keep the scale balanced.
3. Reduce your credit usage. Focus on reducing the use of credit cards so that you don’t overextend your credit usage. Keep one card for emergencies or situations that only accept credit cards and get rid of that wallet full of rarely used or individual retail store credit cards. Try to keep your credit card debt low enough to make payments in full every month so that you aren’t paying interest on past purchases.
4. Use a budget. Create a budget with the goal of paying off your debt and stick to it. Budgeting isn’t rocket science – it’s a plan to help you spend your money and maintain your expenses. One of the best ways to take control of your spending and pay off your debt is to work off a budget.
5. Live frugally. Couponing, consignment shopping, eliminating unneeded memberships and subscriptions, and meal planning are just some of the myriad ways you can start living frugally to get out of debt. Cutting expenses where you can is key to saving money. Where can you start adopting frugal living habits in your daily life?
6. Make more money. Getting a part-time job, starting a side business, or selling some of your own items are all ways to earn more money. Research some money-making opportunities to find the best fit for your situation, then take the extra money you earn and put it toward your debt.

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