Take a fresh look at your lifestyle.

10 Steps to Reducing Debt and Staying on Track Financially

By: Gerelyn Terzo of Sharemoney

There comes a time when you realize just how much of your income is being used to service your debt. Whether it’s credit cards, student loans a house payment, or something else, debt can be expensive. It can prevent you from doing all the things you’d like to accomplish in life, like traveling to another country.

In this article, we’ll provide 10 steps to reducing your debt and staying on track financially. These are tried and true methods that have worked for other people just like you. The sooner you get started, the sooner you’ll be more in control of the money you earn.

1.   Snowball or Roll Down Systems

You may have heard of the snowball system. It’s touted by money experts like Dave Ramsey. Another finance pro, Suze Orman, urges a method similar to this one called the roll-down. They are similar approaches with a common goal of being consistent and slashing your credit card debt.

The rolldown method starts with the credit card that has the most stubborn (highest) interest rate attached. Pay down this balance first, and then apply that same monthly payment amount toward your other cards next. Continue this approach with each card until all the balances are zero.

The snowball approach tackles the card with the lowest balance first. Once you’ve gotten this card balance down to zero, apply that payment amount to your next lowest balance. Keep it going with each card. In both models, continue to make payments on all your other cards in the meantime.

2.   Take Scissors to Your Cards

If you truly want to reduce your debt, consider cutting up your credit cards. It’s the only surefire way not to use them (even though you could still make e-commerce payments with your saved account details).

The problem with credit cards is that they keep you in a vicious cycle of debt. If you want to break this cycle entirely, you’ll have to do something drastic. If you want to hold onto a card or two for convenience, just be sure and pay off the balances each month so you don’t find yourself mired in debt again.

3.   Refinance Your Loans

If you’ve got a mortgage or an auto loan with a high-interest rate attached, consider refinancing to a lower rate. Doing this could save you thousands of dollars on that loan. Plus you’ll pay off the balance faster. A debt consolidation loan could offer a lower interest rate than you’re currently paying so look into that option. Another choice could be a balance transfer card, which could have perks like a zero percent APR for a while.

4.   Stick to a Budget

This next step has more to do with staying on track financially. But if you’re ever going to reduce your debt, you’re going to need a plan. This is where a monthly budget comes in. There are apps that can help you with this process if you need help, like EveryDollar or Zero-Based Budget, to name a couple.

These apps will show you where your money is going and suggest ways that you can save money, too. This could go a long way in helping you reduce your debt and stay on track financially.

5.   Earn Extra Income

Speaking of mobile apps, it’s never been easier to start your own business. Perhaps you have items to sell or would like to offer your services for things like ride-share, dog-walking, babysitting, food delivery, or something else. There’s demand for all of these things and more.

6.   Own Your Car

If you have an auto loan, it could be one of the biggest sources of debt in your personal finances, especially if the interest rate is high. People are stuck with monthly payments in the ballpark of $565 as interest rates continue to inch higher.

One way to avoid this high payment is to save your money and buy a used car at a price you can afford. This way you eliminate one monthly payment and have more money on hand to pay down other debt. Just make sure the vehicle is in good condition so you won’t have to shell out money at the auto repair shop.

7.   Cash Is King

Mobile payments are fast, easy, and convenient. However, they could also prevent you from feeling the pain of a payment. One way to truly understand how much you’re paying for items is to use cash. This ties back to your budget. Keep the cash for relevant budget items, like your food expense, in an envelope. When the money’s gone, you won’t overspend without having to take some extra effort.

8.   Use Coupons

It used to be that shoppers had to cut coupons out of a circular. These days, thanks to technology, you can just clip coupons on your mobile app. Find a grocery store or big-box retailer that has its own app and check those coupons before you shop. The savings will add up and you can apply the extra money toward reducing your debt.

9.   Government Perks

The U.S. courts are in the middle of making a decision on a student loan relief program. You could be one of 20 million people who will see that burdensome debt disappear. Or you could see some of it erased. Keep up with the latest developments on this program and what the courts decide. You’ll need to apply for loan forgiveness if the program stays intact.

10.                  Stop the Cycle

Of course, an important step in reducing your debt is not to take on any more of it. We touched on this step in the credit card section. But it’s an easy trap to fall back into. If you keep adding to your balances, you’re going to make it more challenging to repay what you already owe. If you’re struggling to afford the payments you have, see if you can negotiate a payment plan with the creditor(s).


Once you put any of these tools in motion, you’re on your way to debt freedom. Even if your debt is not at zero, you’ll begin to feel less of a load on your shoulders with each payment. Don’t get discouraged.

As you repay these obligations, you might see improvements to your credit score thanks to lower debt utilization and on-time payments. This might make you a more attractive candidate to lenders. However, to stay on track financially, avoid falling into the same debt trap in the future.

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