4 Ways You Can Reduce Debt with Ease


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Getting into debt is much easier than getting out of it. People get into debt due to unexpected expenses, job loss, or simply overspending. Some of the popular debt includes medical bills, credit card bills, student loans, car loans, or mortgages.  These obligations can get out of control by the time you realize what is happening.

Becoming financially free requires strategies, consistency, time, and effort. However, this is not always easy because you have to keep up with monthly payments of your bills, save for emergencies, and make minimum monthly payments on your loans.

The good news is that there are 4 best strategies that you can use to reduce your outstanding debt with ease.

Let’s get started.

1.   Build an Emergency Fund

Someone trying to get out of debt may consider building an emergency fund counterintuitive. In fact, instead of maintaining a savings account, they may opt to use these funds to pay off their debt. But having an emergency fund is crucial because it stops you from creating more debt. The savings cushion you when you get emergency expenses. In fact, this gives you cash to pay these bills instead of reaching out for your credit card or missing your monthly repayment.

So, put 6-12 months’ worth of your living expenses in a savings account if you want to reduce your debt with ease. At least start with $1000 or whatever you can afford at the moment and then grow it slowly as you pay your debts.

Emergency Fund

2.   Consider Debt Consolidation

Some people have a short list of debts which include a student loan, car loan, or credit card. Others have a longer list because they have multiple forms of debts that include credit card bills, car loans, student loans, mortgages, personal loans, medical expenses, etc. Managing such kinds of debt is tricky and failure to keep up with minimum payments can cause them to swell.

Accruing a lot of debt is not good for your mental and physical health. Therefore, you should look for ways to start shrinking your debts before it gets out of control.

Debt consolidation simply means merging your debts or putting them under one roof. So rather than making multiple payments, you simply make one. This strategy saves you a significant amount of money because of lower interest rates. You can click here to learn more about some of the remarkable debt consolidation options.

The next question that many people with debts ask is when and how to consolidate their debts.

Debt consolidation is an excellent strategy when you have a huge debt which is still below 50% of your annual income (debt-to-income ratio). But you are eligible for debt consolidation if you have a good credit score. Actually, this helps you negotiate your interest rates when consolidating your loans to a figure lower than the rates on your existing loans.

Still, this solution is not ideal for people with small debts that they can eliminate in less than six months or those unable to make minimum monthly payments on their existing loans. Put simply, not everyone can consolidate their debts because it’s not a one-size-fits-all solution.

You can start by consolidating unsecured personal loans because rolling your debt makes it easier and cheaper to manage your total debt. The interest rate is much lower than it is when making multiple monthly repayments. Next, consider consolidating your home equity loans and credit cards.

3.   Opt for Debt Settlement

As mentioned above, not everyone is eligible to roll their debts and make a single payment. Because of that, there are third parties that renegotiate with your lenders in order to shrink your debt. Their mission is to bring you and lenders together so that you can agree on a new deal because your present situation is not working and can’t pay the current debt as it is. So, after the negotiations, you make payments through the debt settlement company which takes their cut and pays the lender.

Debt settlement is a perfect option to reduce your debt with ease especially when you’re completely broke and have no other options.  Although this is a good solution before declaring bankruptcy it has a huge impact on your credit score.

4.   Increase Your Income

Putting more money toward repaying your debt reduces the loan and saves you money because you pay a lower interest rate. However, to come up with the extra money you need to ask for a pay raise, work more hours, get a well-paying job, start a side gig based on your availability, interests, skills, and personality, or turn your hobby into a business that generates extra income. If not so, you can sell some unwanted items in the house to generate money to pay your bills on time or in full, even as you build a good credit score. You must also reduce your expenses when your income grows. It involves eating homemade food, switching to cheaper service providers, and cutting unused memberships and subscriptions entirely.

Actually, increasing your income and paying higher than the minimum help you avoid late fees and high interest. Exploring tax deductions and credits can help you get a big tax refund which can boost your income, so talk to a tax professional. The extra income can allow you to grow your emergency fund and buy new items with cash instead of adding new debt.

The four suggestions can help you reduce your debt with ease. However, not being able to pay your loan because you’re completely broke can cause stress. Actually, not being able to pay debts promptly can be overwhelming. If you’re experiencing that you can speak to certified credit counsellors.


Getting out of debt should be your priority. Building an emergency fund, seeking credit consolidation, debt settlement, and growing your income are 4 ways you can reduce debt with ease. The goal is to maintain a good credit score and limit the chances of growing the existing debt due to late penalties and high interests but instead shrink it.

So, if you’re determined to eliminate your debt as quickly as possible you can see here additional ways to achieve just that.

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Kokou Adzo

Kokou Adzo is a stalwart in the tech journalism community, has been chronicling the ever-evolving world of Apple products and innovations for over a decade. As a Senior Author at Apple Gazette, Kokou combines a deep passion for technology with an innate ability to translate complex tech jargon into relatable insights for everyday users.

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