ways to reduce or eliminate debt

Two Tried-and-True Ways to Reduce or Eliminate Debt

Do you ever find yourself wondering what the quickest way to pay off credit card debt is? Which credit card to pay first? Which bills to pay off first? How to pay off debt fast? How to budget to get out of debt?

Good news, you’re not alone. Everyone has these thoughts on a regular basis, especially those with a lot of debt and not a lot of money or know-how about ways to get rid of that debt. But rest assured, there is an answer to the question you probably ask yourself more than anything…when will I be debt free? Sooner than you think if you keep reading!


Pay Off Debts First

Should you pay off your debts or invest your money? The simple answer is to pay off your debts. Debt is like the ball and chain constantly dragging along behind you attached to your ankle. It’s the nagging voice in the back of your head. But it’s manageable! It’s possible to cut that chain and free that ball so you can walk without being bogged down.

Before you decide which one of these methods is for you, you have to take a few preliminary steps. For starters, you should get rid of your credit cards. If you have ten, cut up nine of them. Really! Call your credit card company and cancel them so you cannot use them anymore. ways to reduce or eliminate debtThe balance will stay in place but not being able to use them will keep you from accumulating more debt. Another thing you should try doing is journaling your spending for a month or two. Buy a basic journal from any store and write down what you’re buying and how much you’re spending on it. Food? Write it down. Clothes? Write it down. Entertainment? Write it down. Write down everything with an accurate dollar amount so at the end of the week, you can look at that dollar amount and examine where you’re overspending. When you identify where you’re spending too much, you can begin to cut down on that dollar amount. If you see that you’re spending $100 on food a month but $300 on entertainment, it’s safe to say you can slash entertainment down to something more reasonable like $25 or $50. You should be reasonable with your spending and prioritize what deserves your money and what doesn’t. Once you have a basic handle on your spending habits, you can determine which debt paying method is best for you.


Try One of These Two Proven Methods

There are two methods you should be aware of to help you get a handle on your debt load. Debt stacking is the first method. It involves making a list of all your outstanding debts in order of highest interest rate to lowest interest rate. This method recommends making the minimum payment on all your loans so you can take whatever extra money is left over to pay off your highest interest loan. By following this method, it allows you to pay off that monster loan so that you can take care of the smaller, lower interest rate loans later on.


Advantages and Disadvantages of Debt Stacking

Some advantages to using debt stacking is that you can avoid those nasty extra interest fees. By paying off the debt with the highest interest rate, you’re able to spend money paying down the actual debt instead of contending with ever rising interest amounts. Another advantage is the mental relief of getting rid of that big interest rate first. Interest causes a lot of anxiety! If you’re paying $350 on a bill and $100 of that is going solely towards interest, it can feel like you’re taking two steps forward and three steps back! But don’t worry. Blast that high interest payment with all you’ve got and before you know it, it’ll be paid right down.

A disadvantage to the debt stacking method is that if your debt with the highest interest rate also happens to be the largest amount, it will be a while before you are able to enjoy any real payoff progress.


Advantages and Disadvantages of Debt Snowballing

The second method is debt snowballing. This method is recommended for those who are unfamiliar with handling their own finances as it is an easier way to pay off things. It’s often referred to as the baby step method because it doesn’t involve a lot of thought or financial know-how. Debt snowballing means making a list of your debts ranked in order of smallest amount owed to largest amount owed. This means the first debt you will pay off will likely be the smallest debt. This allows you to get rid of the small things first so you can devote the lion’s share of your income or extra cash towards the larger things.

The pluses of snowballing your debt is that you’ll pay off your small debts incredibly fast because of how much money you’re throwing at them. ways to reduce or eliminate debtThis means you get to enjoy being all those steps closer to being debt free! By putting a lot of money towards those smaller debts or bills, you can knock them off one by one and use that extra money to keep paying the next debt. If you pay $50 a month towards one bill and pay it off in four months, that frees up that $50 to pay towards your next bill, which you could pay off even faster! With that doubt extra $50, you can put $100 towards your next bill after that and so on and so forth.

A drawback of the snowballing method is that you may end up paying more in interest rates on your larger debts while you focus on the smaller ones. This could make your debt load seem more daunting than it is but it will be paid off in due time.

All throughout this paying off of debts, there are some things you should really keep in mind. For starters, be kind to yourself. Finances are incredibly stressful and the last thing you need is putting more stress on yourself than is necessary. A key element to successful debt relief is modifying your behavior. Modifying behavior starts with that spending journal I mentioned earlier in this article! Seeing your spending laid out in words and numbers makes them real and when they seem real, they can be changed. Those changes, when you start them, will have benefits almost immediately. New behaviors are easier to stick with when you see positive outcomes because of them! And what better outcome is there than paying off debts? Hardly any!

One of the most important things to remember when paying off debt is to reward yourself for your progress. Did you just pay off a credit card? Treat yourself! Go to the movies or buy yourself an ice cream or a sweet! Enjoy a reward, but enjoy a responsible one that won’t send you back into debt. Rewarding yourself can also mean setting up a reward schedule for yourself. Pay off your first credit card and you can go see a movie. Pay off your second credit card and you can get a manicure or a pedicure. Pay off your third credit card and you can enjoy a massage! These small incentives will keep you focused and will prevent you from spending frivolously while you’re trying to pay things off.

Flexibility is also important in debt payment. Set up a good schedule but don’t make it so rigid or unrealistic that it gets hard to follow or keep up with. Be realistic! That is the most important thing when it comes to money.



I often find myself asking what I should pay off first, wondering what debt paying down strategies there are, what kind of debt reduction plans I can explore for myself. It’s not only myself that I have to worry about and take care of, it’s my family, my children. They have expenses just like I do and I need to be sure that when I’m paying off my debts, I’m doing so in a way that lets me prioritize my family and what I need to spend on them to keep them safe, happy, and healthy. I have many little debts so I’m going to opt for the debt snowballing method. If I can pay off all these little things first, that means I will have extra money for bigger payments on bigger debts. It also means that I will have extra money just in general in case an unforeseen expense comes up, like an injury or a sudden illness.

Whatever method you choose for yourself, plan for it. Write everything out so you can see how much of your money is going where. This gives you control over your debt and, by extension, control of your life. Managing your debt isn’t as hard as everyone says it is, you just need a little bit of attention, care, and dedication and you’ll be well on your way to being in the debt free place you very badly want to be in!

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