Advertiser Disclosure
X

Advertiser Disclosure: The credit card offers that appear on this site are from credit card companies from which MoneyCrashers.com receives compensation. This compensation may impact how and where products appear on this site, including, for example, the order in which they appear on category pages. MoneyCrashers.com does not include all credit card companies or all available credit card offers, although best efforts are made to include a comprehensive list of offers regardless of compensation. Advertiser partners include American Express, Chase, U.S. Bank, and Barclaycard, among others.

By

Dig Deeper

23,605FansLike
20,058FollowersFollow
37,271FollowersFollow

Become a Money Crasher!
Join our community.

3 Simple and Effective Ways To Reduce Your Debt

When you’re in debt, it feels like you’ll never clear the outstanding balance and get back to normal.  While you’re never going to make a really big dent in your debt without making large payments towards it, there are some smaller baby steps that you can take to start reducing your debt without completely depleting your bank account in the process.  Here are three tips for tackling your debt and getting used to making regular debt-busting contributions to the outstanding balance.

  1. Round down your account balance.   This can be an easy way to build up a separate amount to throw at your debts.  The basic idea is to keep your everyday bank account at a round figure, such as $240, and transfer anything above that to a separate savings account. For example, if your account balance is $246.47, you can either transfer $1.47 to round the balance down to $245, or transfer $6.47 to round it down to $240.  It may seem like it takes a while to build up savings using this method, but you’d be surprised how quickly it adds up.  I’ve been using this method for just over a year now and managed to scrape together an extra $300 last year simply by rounding down the balance in my everyday account and sending it over to a separate savings account.  In the very early part of 2010 alone, I’ve socked away $30.  I always keep a set amount in my everyday account to cover my regular outgoing expenses and have a bit extra in case it’s a bad month.  I don’t ever overdraw my account,  and I can honestly say that I don’t miss the money.  Whenever you’ve put together a good amount, such as $50 to $100, use it to make a payment on a credit card or loan and then start again.  It will put you in the habit of consistently chipping away at your debts.
  2. Save loose change.  Stashing away your loose change is another way of building up money without feeling the effects too much.  I often find myself spending loose change on junk that I don’t need and wouldn’t normally purchase with my debit card, so this is a double savings for me.  You don’t have to save all of your spare change, but even small coins can add up over the course of the year.  I try to put all of my loose change in a tin and bag it up at the end of the year to cash in at the bank.  Then, I apply all of the money saved from the loose change to debt that I owe.
  3. Make regular payments. In addition to the above tips and tricks, you can also make daily, weekly or monthly payments towards credit card debts.  You may choose to pay a small amount on a daily basis, such as $2 per day, or pay the equivalent of that on a weekly or monthly basis.  This will slowly decrease your outstanding balance, but more importantly, it gets you into the habit of making regular payments towards your debt.

What works for you?  Are you disciplined enough to pay down your debt without saving little by little?  We’d like to hear your feedback on the issue of paying off debt.

Sally Aquire
Sally is a UK-based freelance writer. As well as personal finance, she also writes on health & beauty and lifestyle topics. When she's not writing, she enjoys reading, shopping, hanging out with friends and generally making the most of her downtime!

Next Up on
Money Crashers

Best Items Resell Profit

Thrift Store Flipping – 8 Best Items to Resell for a Profit

Whether searching the offerings at an estate sale or combing through the aisles of a thrift store, society is obsessed with the idea of...
Cruise Ship Ocean Islands Sea

10 Tips to Save Money on a Cruise Vacation

Cruising has never been as popular as it is today. Nearly 26 million passengers boarded cruise ships in 2017, and the Cruise Lines International...

Latest on
Money Crashers

Sign Up For Our Newsletter

See why 218,388 people subscribe to our newsletter.

What Do You Want To Do
With Your Money?

Make
Money

Explore

Manage
Money

Explore

Save
Money

Explore

Borrow
Money

Explore

Protect
Money

Explore

Invest
Money

Explore