Hints and Tips on How to Reduce Personal Debt


Debt, when used wisely, is a tool to help us get the money we need to make big expenditures we would otherwise be unable to afford or to get access to other investments. However, debt is easy to lose track of. When it starts looming large over us, we need a strategy to reduce it and make it manageable again.

Finding extra money

If we have to start paying off more debt straight away, then the answer lies in finding every spare penny we can in our finances. There are a few ways to do this:

● Start budgeting, laying out your expenditures against income. Pay attention to the reductions we can make in expenses.
● Curb impulse buying. When grocery shopping, lay out a list in advance and stick to it. For every one-time-only expense, give it 24 hours to think about it. This will help us realise whether or not it’s a priority.
● Take a close look at bank statements and pay attention to any subscriptions or services we don’t need.
● Compare utility providers with competitors to get a better deal or get on the phone and negotiate with them.

Put a plan together

When we have that extra money, we have to start deciding where it goes. If we only have one debtor, then paying them off as soon as possible is the goal. Otherwise, prioritise which debtors to pay off first. Are there any deadlines you have to meet? Could one debt be paid off in full very soon? Don’t forget to take interest into account. The higher the interest, the more it will cost to let it wait, so we should focus on those first. If we have any debt that offers a “minimum repayment”, we should pay more than that. Sticking to minimum repayments won’t only mean that we carry that debt for much longer, it can also adversely affect our credit in the long-term.

Restructure your debt

The idea of taking on more loans or debt when dealing with debt might seem counterintuitive, at first glance. However, debt consolidation and shuffling can often offer us much more favourable terms on repayment strategies. We can restructure in a way that eliminates certain deadlines or freezes or slows down interest growth. Consolidation also allows us not to have to deal with a variety of debtors and instead stick to just one.

Find extra income

If we’re struggling to pay debts with our current income, then we might need to find some more. For instance, we can start selling clothing, appliances, and goods that we don’t need or use any more through the many online marketplace websites. The internet also offers a lot of ways to make extra money, such as taking up a freelance job as a virtual assistant or completing surveys for money.

Know when it’s all becoming too much

Sometimes, debt can prove too much for us to handle. When that’s the case, it pays to know that burying our head in the sand isn’t going to help. Many credit companies would much rather hear in advance that we are struggling to fit the current repayment model. In many cases, they are more than willing to help restructure the repayments in a way that better fits our capabilities. It can also stop them from handing the process of collecting repayments to collections companies, at which point it’s far too late to negotiate.

Even when you don’t feel like your existing loans and debts aren’t out of control, the tips above should be followed. The more consistent you are with your debt reduction strategies, the much lower your risk of falling into trouble.