Reducing Debt Tips – 10 Best Tips

Understanding how to effectively reduce debt is very important for taking control of your money.

There are a few tips and resources to get connected with to set yourself up for success.

Through these tips and resources you should be able to find the information you need to come up with an effective strategy to decrease debt.

I want to focus on 10 tips that I like to use to reduce debt:

Create an Effective and Detailed Budget

Connect With Useful Resources

Stop Increasing Your Debt

Be Frugal in Specific Areas

Calculate Out Realistic Payment Plan

Ask Creditor for a Lower Interest Rate

Build Up A Safety Net

Stop Investing

Pay Off 1 Debt Completely

Remove or Reduce Any Expensive Hobbies and Expenses

These 10 tips will help you have a stronger chance of managing your money well.

This post will provide helpful information about which reducing debt tips are the most useful for managing money better.

Create an Effective and Detailed Budget

It is very important to create an effective budget if you want to stop increasing debt. The budget is often times an area where people can potentially save much more than they think.

To create a budget requires you to calculate and complete the following tasks:

  1. Yearly Expenses
  2. Yearly Income
  3. Yearly Post Taxes Income

If you calculate up what all of these come out to be, then you are going to be much more prepared to save money and focus that extra money on paying off the debt.

  1. Yearly Expenses

The yearly expenses involves all your total expenses for the year. The main expenses involve the following:

  • Rent/Mortgage
  • Utilities(Water, gas, electric, etc.)
  • Car Expenses(Including registration, gas, car insurance and more)
  • Food

Rent is often times one of the expenses that most people think is not able to change very much but there is actually a few ways to save money on rent.

If you are interested in reading about how to save money on rent, read How to Save Money on Rent.

These expenses listed here are only the main expenses that most people have and your list will most likely include more expenses.

Take your time and calculate what each of your expenses costs you in a year and then add them all together to get your yearly expenses. I like to determine what my smaller and miscellaneous expenses are by reviewing my online banking to find all the expenses.

Separating your expenses into changeable or not changeable can be helpful too because then you can focus on reducing certain expenses.

2. Yearly Gross Income

Gross income is what your income is before taxes are taken out. Your yearly gross income can be calculated by taking your weekly income and multiplying it by 50 to get your yearly income.

If your weekly gross income is $750, then multiplying it by 50 will give you will give you $37,500.

$750 = Weekly Gross Income

$750×50 = $37,500 Yearly Gross Income

There are 52 weeks in a year, but I always play it safe by saying that 2 weeks out the year are going to be unpaid due to a combination of sick time or an unexpected take off from work event.

3. Yearly Post Taxes Income

Once you have your yearly gross income, then the next step is to determine what your income is after taxes are taken into account.

To do this easily you can go to a tax calculator website, such as Free Income Tax Calculator.

Once you click this link, you will be asked to provide your income, current city, state and filing status. This site will very quickly calculate what your post taxes income is and give you all the details about how much each specific tax will take out of your income.

If you enter $37,500 into this site’s calculator, it would tell you that your post taxes income will be $30,906.

Taxes = $6,594

$37,500 – $6,594 (Taxes) = $30,906

$30,906 = Yearly Post Taxes Income

This calculated number is based on California state taxes and your post taxes amount could be slightly different if you are not living in California.

Once you have your expenses and post taxes income, then you can start to calculate how much extra money you have each month.

Take your total post taxes income for the year and divide it by 12 to give yourself the monthly income and then do the same task for your expenses.

If your total post taxes income for the year is $30,906 and your expenses for the year are $24,000 for the year, then you would know that you have $6,906 post all expenses and taxes income per year.

$30,906 – $24,000 = $6,906 Yearly Post Expenses + Taxes Income

Turning your income and expenses into monthly amounts will give you a better idea of what you actually have left over each month.

Take your monthly post taxes income amount and minus your monthly expenses amount to figure out how much you have remaining each month.

Doing the calculations this way will help properly prepare you for your expenses each month of the year.

Some months you might seem to have extra money left over in your bank account.

But that could likely be due to some of your expenses only coming on at certain times of the year, such as back to school shopping, car registration or going to the dentist.

If you take the time to accurately figure out your monthly post taxes income and your monthly expenses, then you will be much more prepared for managing money better.

If you want to learn more about how to create a budget, then read How To Create A Good Budget.

Connect With Useful Resources

Getting connected to useful resources is key because they can provide you with valuable tools and ideas to help reduce the debt.

Each of these websites has articles dedicated to reducing debt, and tips to help save, make or manage your money.

Going to the following websites can be helpful:

  • ThePennyHoarder

The Penny Hoarder is a tremendous resource for saving, making or managing money. They have articles that teach you how to manage money wisely and also how to get jobs that can consistently boost your income.

The Penny Hoarder is a perfect site to find valuable information on how to make money through a great side job or find a job that you didn’t even know was out there. This site has many articles that could give you tips to manage money better and learn how to budget money more effectively.

The Smart Wallet is a website focused on delivering easy ways to make money, save money and find deals.

They have many articles that are directed at managing your money, building a safety net or getting a new job in your area.

The three main areas they talk about are the following:

  1. Make Money
  2. Save Money
  3. Life

Each of these main areas is explained in great detail. The Life menu on the home page talks about investing your money and other topics including college, travel and home.

Spending time searching these main areas will lead to you understanding how to reduce your expenses in many categories.

The Simple Dollar is an excellent resource for learning how to reduce debt and save up more money. They have an article that focuses on the best ways to get out of debt faster and this could be a big resource on its own.

This is a site dedicated to helping educate people on how to simplify their personal finances and gives tons of helpful information to do just that.

They provide specific information on Credit Cards, Loans, Insurance and Banking and give you a significant amount of useful tips for each of these main categories.

Stack of Coins for Debt Paying
Stop Increasing Debt


Stop Increasing Debt

Finding a way to get yourself into the least expensive financial situation possible is very important. This will give you the best chance to get out of debt.

It is key to focus your time and energy into reducing the debt amount and to do this you probably will have to cut down on many extra expenses.

Adopting a more minimalist way of living is a way to reduce your expenses and set you up for costing the least you could be costing.

It is important to take into account how much interest is connected with a debt because this will add a significant amount to how much will eventually have to be paid.

Make sure to check the interest rate and calculate this into how much will have to be paid.

Visiting a website that has a specific debt repayment calculator is going to be helpful for figuring out how much you will need to eventually pay for each debt.

A great website that has this calculator is on the Credit Karma site, called  the Debt Repayment Calculator.

You can try out a few different free online and mobile debt repayment tools such as Tally, which is designed to help track the progress that you make as you’re paying off the balances.

These resources can help you stay up to date on where you are in terms of paying off the debt and give tips to encourage you to pay off the debt quicker.

Be Frugal in Specific Areas

Being able to cut down your expenses in a few key areas can allow you to have extra money that can end up going towards paying off the debt faster.

I like to find the areas that I can most likely reduce my expenses in and focus on those areas.

Prepare Certain Foods to Save Big

The main areas I like to focus on are the following:


A big way to immediately save is by preparing more food at home and not go out to eat as much. If you start preparing simple to create meals, such as spaghetti or rice with black beans, then you can immediately reduce your food expenses significantly.

A key trick I do is to buy easy to make food because then I can realistically create these foods even when I am tired.

Set yourself up well by meal planning more and the more that you do this the more significantly you will save money.

If you are interested in learning more about how to save money, read How to Save Money on a Low Income.

Miscellaneous Expenses

Reducing your miscellaneous expenses, which include going to the movie theater or buying coffee every day, can be accomplished in a couple ways but I like to focus on the easiest to improve ways.

The main way to cut down on going out to the movie theater is by watching movies and shows at home using streaming sources such as Netflix or Hulu more.

Coffer Maker
Use Coffee Maker to Reduce Coffee Expensive

Reducing your coffee expenses can be achieved by buying a coffee maker and only drinking the coffee that you make at home.

I recently bought the Mr. Coffee 12-Cup Coffee Maker and it has saved me a ton of money and time.

Taking a look at any of your extra expenses and determining which ones are not necessary and figuring out a way to decrease these expenses down will really save you money.

Car Insurance Expense

Another big area to potentially save is through your car insurance and double checking that this is as low as it can be while still covering you enough.

There often can be extra coverage included in this plan and it can be a great idea to review your current car insurance policy and make sure that you are not over paying.

It never hurts to look at your Collision, Comprehensive, Motorist, Liability, Personal Injury Protection and Tow Truck coverage, and see how much you are paying for each of these areas.

Review each area and think about whether it is possible to reduce your expenses in any of these categories.

You can always check around with other car insurance companies and get free quotes to see what they would be charging you for the coverage you want.

Calculator and Pencil for Reducing Debt
Calculate Out A Realistic Plan


Calculate Out Realistic Payment Plan

Calculate all your expenses and determine what you can realistically afford to pay each month towards your debt. Come up with a long term plan of paying off the debt that you can stick with and complete.

Reviewing all your expenses can often be a very valuable task. This is because it can reveal hidden expenses such as an unused subscription still being paid by you.

A key way I like to break down a payment plan is by taking the total amount owed and determining how long I want to take to finish paying this total off.

If you have a $2,700 total amount and you want to pay this amount off in 1 year, then you take $2,700 and divide it by 12 to get $225 per month.

This means that every month you will put $225 towards paying off the amount owed.

$2,700 = Total Amount Due

$2,700/12 = $225 Amount Due Per Month

Reducing your total amount into this monthly payment always makes it much easier to get your head around.

As you consistently pay this amount each month you will decrease the total owed and gradually feel more in control of your finances.

Ask Creditor for a Lower Interest Rate

Asking your creditor for a lower interest rate to try and reduce how much you have to pay each month. If you have a good payment history, then you can potentially negotiate for a lower interest rate.

Having to pay a higher rate than you need to will only delay how long you are in debt because you will have to pay even more than you could be paying.

Taking the time to research this option could be very valuable to reducing debt.

Pile of money
Build Up A Safety Net

Build Up A Safety Net

Building up a safety net of money in your bank account can allow your finances to be more secure. This could actually help you make more consistent payments on the debt once the safety net is established.

Having extra money in your bank account will give you a cushion to fall back on and give you some essential financial wiggle room.

Creating a financial cushion will help you be prepared for when life sends unexpected expenses.

A sufficient safety net is likely to be a different amount for each person but a general rule is to build up 3 months worth of expenses in your bank account. This amount will likely give you enough to safely be ready for emergency expenses.

Now it will take time to build a safety net of money for 3 months worth of expenses. So first you can aim to create 1-month worth of expenses in your bank account.

Building up a 1-month worth of expenses safety net could provide you with a great cushion. This cushion would be able to help you focus on paying off the debt but also allow you to feel financially secure from other unexpected expenses.

Stop Investing

Stop putting money into a retirement account whether it is a 401k, Roth IRA, Traditional IRA or other retirement planning account. This money going towards retirement is only slowly down how fast you can pay off your current debts.

Temporarily stop putting money aside for retirement and focus on paying off the debt. Only after the debt is paid off then return to putting money aside for retirement.

Pay Off 1 Specific Debt Completely

This will feel great and you will reduce your debt more by doing this. Focus on the highest interest rate debt and pay that one off.

Paying off one debt completely will remove a big weight from your shoulders and help you get closer to being debt free.

Focusing on the highest interest rate one will allow you to save more money because this one was likely to be costing you the most.

Remove or Reduce Any Expensive Hobbies and Expenses

Removing any expensive hobbies could free up some key money that could be repurposed for debt repayment.

Don’t go for any of the more expensive activities such as Traveling, New clothes, New gear and Concerts.

Try to limit extra activities that are costly and opt for the less expensive options until you have removed debt from your life.

Review your expenses and determine whether you can cut out any extra hobbies or expenses that are costing you too much.

Use the Resources and Tips Here

The useful resources and tips here have helpful information and tools to reduce debt.

The resources listed should be utilized if you want to save more money, pick up a side job to get an income boost or learn tips to manage money better.

Gathering as much information from these resources is critical to coming up with various strategies to reduce debt.

A long term plan that you know you can accomplish is much more advantageous then going for a faster but unrealistic payment plan.

If you are looking for another resource that could potentially get you out of debt, read The Total Money Makeover Review.

I hope this post, which focused on reducing debt tips, gave you some helpful ideas on how to reduce debt and manage money better.

If you have any questions, please feel free to leave them below and I will answer them as best as I can.

18 Replies to “Reducing Debt Tips – 10 Best Tips”

  1. This is such a helpful site.
    I’m a ‘privileged pensioner’ in New Zealand and receive a small amount of money every fortnight. I found it helped me make automatic fortnightly payments for my Car Insurance, Power, Phone & Internet, and Local & Regional Rates. (this took a while to set-up, but when I explained to authorities that I was on a budget, they helped me) Then put $25 a fortnight into a Miscellaneous account. I use plunger black coffee & loads of water, and buy ‘Real Food’ like grass raised meats & poultry, green vegetables, not much fruit, and kumara – then make one-pot dinners which I freeze into small portions.

  2. I think that this is a very useful article! I have many friends who have problems with debts and I will recommend them to read this. Many of them don’t know where to start but after reading this they will have many good actions to start with. Thanks for sharing the knowledge, Jesse!

  3. A great article, these are great advice to follow if you are in debt.
    The best way is to deal with the problems early on before the fire really catches wind! 🙂

    Dearest regards, Torgny

  4. I recently wrote an article on where folks can cut back when saving money for a home purchase. One of the things was to cut their cable bill. We were spending $175 monthly with Spectrum. When we took a look at which channels we watch the most, we had less than 10. Now we only pay $30/mo plus internet for all ten channels. We already had Netflix and Amazon Prime so we added Hulu for $5.99/mo. A big monthly savings.

    1. Very interesting idea to focus on saving money through cutting the cable bill.
      I will do some more research into this. Going for a Netflix, Amazon Prime and Hulu combination of streaming services will give you a lot of different options for tv shows and movies.

  5. Jesse,

    As most of us have some sort of debt, this website is very helpful! I believe structure and actually paying attention to every dollar spent is very important. I was guilty of not paying attention for many years because I didn’t want to face the reality (little money in my bank account, and big debt). It would make me feel sick. But now I realize putting everything on paper and figuring out a budget makes me feel SO MUCH BETTER. I finally feel in control and am making progress. Great site.


  6. Money should never go to waste, and debt should always be eliminated. Thanks for sharing these thoughtful tips for saving money. I found a lot of useful info here.

  7. Hey Jesse. I’m so glad to have read your article. It was good and bad:

    The good part is that you’re really informative and break down expenses, money saving resources and better money management skills–and where to get more info on them.

    The bad news is, I’m the guy spending way to much on all the money wasting things: food, cable, extra phones, forgetting to cancel ongoing trials that expired and more.

    I glad I found out now as I could have alot more money in the bank. I appreciate you making me think.
    I’ll start making changes immediately.

    Thanks again,


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