Debt Reduction Strategies

When it comes to debt reduction, having a strategy can mean the difference between success and failure. No more excuses, you need a debt reduction strategy!Many people are saddled with car payments, credit cards, mortgages, student loans and medical debt. All those debts can add up to monstrous totals that seem impossible to manage let alone pay off. However, there are ways to do it.

Credit Report

Knowledge is the key to getting a handle on massive debt. The fastest way to gain that knowledge is by pulling your credit report. Your credit report contains all your debt and loan accounts whether they’re in good standing or bad standing.

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Once you have your credit report, highlight all your debt accounts and make a list of those accounts on a separate piece of paper so help you decide on your debt reduction strategy. Include the name of the financial institution, the amount owed and the phone number. Once you have the amounts owed on each account add them up. The end number is the total amount of debt you owe. This is good for three reasons. It lets you know how many debt accounts you have, the totals for each account and the grand total of your debt.

Also, while you are checking your debt accounts, check your report for incorrect information. If you find incorrect information, you can dispute the information with each credit reporting agency separately. A dispute claim triggers an investigation into the account. If it’s not your account, it will be removed from your credit report and will help your credit score.

Reducing Living Expenses

The next thing to do in designing a debt reduction strategy is to look at your living expenses. Is there anything you can cut out of your budget that will free more money to pay towards your debts? Some typical ways to reducing living expenses are to cut grocery bills, reduce unnecessary cell phone services, eliminate land lines and cancel cable and satellite TV services. The more items you’re able to cut out of your budget, the more money you’ll have to focus on paying off debt.


The next step in your debt reduction strategy is to calculate your monthly income. This can be done by taking your weekly salary and multiplying it by four. Once you have your monthly income, subtract your monthly bills from the amount. This will give you the approximate amount of money you’ll be able to put towards your debt accounts.

Stop Using Credit Cards

The only way to effectively pay off credit cards is to stop using them. Who knew that common sense would play such a big role in your debt reduction plans?  You can’t pay off the amounts effectively if you’re still charging on the cards. For that reason, it is important to remove your credit cards from your wallet or purse and lock them in a box until the accounts are paid off. Once the cards are locked up, focus on buying everything with the cash in your bank accounts. This will force you to better budget your income and learn budgeting and saving techniques.


There are several ways to go about reducing debt. Some people like to knock out the highest interest rate debts first. Others like to pay off bills from smallest to lowest. Paying off the highest interest rates first works because it reduces the amount of money you’re wasting on interest fees. Paying off bills in order from lowest to highest lets you knock out accounts quickly and show immediate progress on a debt reduction strategy. It all depends on what works best for you.


The biggest thing to remember is that paid off accounts don’t equate to more spending money. It’s important to keep focused on your goal of becoming debt free. Instead of spending the extra money on frivolous items; as you pay off each bill, simply allocate that money towards the next bill. This creates a “snowball effect” because you’re able to put more and more money towards the remaining accounts. It also lets you pay off those accounts faster so that you can get out of debt sooner.  So now go get a debt reduction strategy and start using it!

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