Simple ways to reduce your debt

Particularly in a difficult economy, debt is a scary word to the average consumer, and if you don’t manage your finances carefully you can quickly find yourself in a situation where you’ve borrowed much more than you can afford to pay back.

At one time or another most people have debts they need to pay back – mortgages, car loans and credit card bills are among the most common. Each will come with an interest rate – the percentage of money the borrower must pay back to the lender for the use of that money. Interest rates are how lenders make a profit on the funds they give to borrowers, and many people make the mistake of not paying close attention to these rates and are faced with paying back more than they anticipated.

If you find yourself in a situation where you’ve borrowed more than you can pay back or high interest rates are putting you further in debt than you’re comfortable with, there’s things you can do to take action and help reduce your debt and restore your piece of mind.

Take steps in the right direction

For most people reducing debt doesn’t happen overnight – it’s a gradual process that takes time. Even taking small changes can have a positive impact, and before long you will be taking steps in the right direction. By first reducing, you’ll eventually eliminate your debt. Some common strategies include:

  • Use cash – If you’re regularly making purchases on your credit card, it’s easy to lose track of how much you’re spending until you’ve reached your limit. Keep an eye on your purchases by using cash; you’ll always know exactly how much you have and won’t be able to accidentally overspend.
  • Ditch impulse purchases – Simply speaking, if you want to reduce your debt you’ll also need to reduce your spending. Avoid any unplanned purchases and stay away from the shops. Unless it’s an absolute necessity you’re better off without it – purchasing a new item of clothing or nice bottle of wine will just be another thing that keeps you from paying off your debts.
  • Make a plan – Any time you’re in debt the most important thing to do is make a plan and establish a budget. Figure out exactly how much you owe and to whom; once you know your total debt you can establish a payment plan to start paying it off. List all your current earnings and expenses, and then use this to look for places you can cut back and save money.
  • Create expense jars – If you find it difficult to manage your expenses you may want to create expense jars to help limit your spending. Each month put cash into a jar according to your budget – for example, you might want to set aside some money for eating out and for going to the cinema. Once the money is gone, stop doing that particular activity. It’s a simple and visual way to keep track of your expenses.
  • Pay on time – On most credit cards there is a minimum payment, and fit’s typically very modest. Missing a payment date will effect your credit rating and hurt your interest rates, so even if it’s just the minimum payment make sure you’re paying on time every month.

Asking for help

If you or someone you know needs help or advice in dealing with your debts don’t be embarrassed; facing creditors or high interest rates can be very stressful and it’s not always obvious what to do next.

Dealing with your debt head on will help give you peace of mind so you can get on with your life and stop worrying, and today there are many great services who will offer impartial advice to help you get back on track. Websites like the Money Advice Service offer great tools and resources and are funded by the government. Similarly, the Citizens Advice Bureau can also help point you in the right direction and help you understand your options if you feel your debt has become unmanageable.


The contents of this article are for reference purposes only and do not constitute financial or legal advice. Independent financial or legal advice should be sought in relation to any specific matter. Articles are published by us without any knowledge or notice of the circumstances in which you or anyone else may use or rely on articles or any copy of the information, guidance or documents obtained from articles. We operate and publish articles without undertaking or accepting any duty of care or responsibility for articles or their contents, services or facilities. You undertake to rely on them entirely at your own risk, and without recourse to us. No assurance of the quality of articles is given or undertaken (whether as to accuracy, completeness, fitness for any purpose, conformance to any description or sample, or otherwise), or as to the timeliness of the publication.

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Mother of three grown-up daughters I am the ultimate multi-tasker and am passionate about my role as Silversurfers Website Editor and Social Media Manager. Always on the lookout for all things that will interest and entertain our community. Fueling fun for the young at heart!

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