Climbing Out of the Hole: 5 Proven Ways You Can Reduce Debt

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In July 2018, consumer debt in the United States increased to $3.918 trillion. That number includes revolving and non-revolving debt. Chances are you're dealing with both types of debt.

Most non-revolving debts are student and auto loans. Some examples of revolving debt are credit cards, checking account overdraft privileges, and credit lines. Even if you try your best to keep your finances in check, sometimes the holidays or special occasions can push you to spend more than you should.

We know it's tough to reduce debt once your bills climb up. It might sound like a nightmare, but you can eliminate your debt using the right plan. Don't know where to start?

We have you covered. Here are five ways to reduce or eliminate debt in no time.

1. Don't Take More Debt

It might be tempting to take more credit cards or use one to pay other bills. The problem is that your monthly payment will increase if you keep taking more debt.

2. Pay More Than Your Minimum Payment

Paying more than your minimum payment may seem difficult, but it's the best way to reduce debt faster.

Most minimum payments from creditors include all fees, interest rates, and one percent of your principal amount. Only making the minimum payment can turn into taking you decades to pay off your debt.

3. Aim to Pay Off One Bill First

When we have to pay several bills, it may seem impossible to stay afloat. Strategizing your payments is the best way to reduce debt.

At first, you can decide on paying off your bill with the highest interest or the smallest one to get rid of that monthly payment. Paying off your loan first or the credit card with the highest interest rate will save you money.

4. Request an Interest Reduction with Your Creditor

Debt with high-interest rates will take you longer to pay off. Some creditors are open to lowering your interest rate if you have a good payment history.

You might be hesitant to call your creditor, but it's better to ask them than paying double or triple what you owe in the long run.

5. Consider Debt Consolidation or Settlements

If you owe several debts, you may consider consolidating your debts on a loan. This will allow you to make only one payment and lower your interest rate.

Another option you may consider is a debt settlement. These consumer proposals are legal debt relief agreements.

This strategy will allow you to pay off your debt for less. Consult a legal expert and discuss your options.

Can You Reduce Debt and Earn Financial Freedom?

No matter how difficult it may seem, you can reduce debt and achieve financial freedom. The first step is to create a monthly budget. This should include your monthly income, utilities, and bills.

A good approach is planning around your paydays. Schedule your payments in accordance with your paychecks. Another way to develop financial discipline is by setting up automatic payments for your bills.

Direct payments will push you to be mindful of your spending. Having the right plan is a must to become debt free. We're confident that if you apply our debt reducing tips, you'll eliminate your debt in no time.

Are you considering debt relief to earn your financial freedom? Check out our article to learn more!

 

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