6 Strategies to Reduce or Get Out of Debt

Given the current cost of living, it's understandable how easy it is to go into debt. Even though you may be in good company, staying in debt is not a viable strategy for living a calm, proactive life. Debt not only increases your anxiety level, it also reduces your ability to have many of the things you may be striving for, such as a home of your own, an advanced degree or an easy retirement.¹

If you're in debt, these debt reduction strategies may help you get out of it faster.

1. Know What You Owe

Those monthly bills may be painful to look at, but it's important to understand exactly what you owe and to whom:

• Take note of the fixed costs attached to your utility bills, food bills and rent or mortgage payments.
• If you're paying off credit cards, be aware of your interest rate. Interest charges can make up half of the minimum payment due each month.
• Keep a running tally of your food bills, as well as your recreation costs.
• Analyze recurrent charges and automatic debits for line items like streaming services and virus protection. In some instances, you may no longer need the services you're paying for. You may also be paying duplicate charges to multiple companies without realizing it.
• Keep an eye on your medical and dental bills. If you have health insurance, read the Explanation of Benefits (EOB) statements your insurer sends you each month. In some instances, you may find inaccurate or duplicate charges you've accidentally been billed for.

2. Create a Budget — and Stick to It

Once you fully understand your monthly expenses, you can create a budget that enables you to pay off debt. To do this effectively, you must know how much money is coming in— and what's going out:

• If you're currently working, write down the net amount of your paycheck.
• Include income or payments that come in from other sources, too, such as alimony, child support or rental income from tenants.
• To create a viable budget you can live with, subtract your fixed monthly expenses from your income. Then tally and subtract your discretionary expenses.
• If you're a gig worker, remember that you'll have to pay taxes on your gross income. Set aside an estimated amount of money for your state and federal taxes (and city taxes, in some locations). Consider paying that amount quarterly, or keep it isolated in a separate savings account.

3. Make Proactive Changes

If there's money left over after your monthly bills are paid, use it to pay down your current debt. If you're not bringing in enough money to cover your expenses, you have the option of cutting back and/or generating additional income. This sounds painful, but it may be easier than you think.

How to cut back on expenses:

• Swap out expensive gym memberships for outdoor exercising or lower-cost facilities.
• Reduce your use of spa services, such as weekly manicures.
• Trade in higher-than-average cable services for less expensive providers.
• Reduce the number of streaming services you use.
• Borrow printed materials from the library instead of buying them.
• Cut back on recreational activities, such as movies and eating out.
• Eliminate your daily takeout coffee fix.

Ways to bring in extra income:

• Take a second job that doesn't require additional commuting costs.
• Turn a hobby, such as photography or writing, into income by selling your creative product online.
• Sell gently used clothing and household items online for extra cash.
• Become an influencer by monetizing your social network accounts.

4. Refinance Your Credit Cards

If you have high-interest credit cards with high balances, consider finding a lower-interest credit card that offers a 0% introductory offer on balance transfers. You'll pay a fee to transfer your balance over, but can potentially save hundreds or even thousands of dollars in interest over time.

5. Use the Debt Avalanche Method

Establish a plan for how you will pay down debt. Make sure you have a tracking mechanism in place so you can follow your progress. This can be energizing and rewarding. One way to do this is with the Debt Avalanche Method:²

• Make a list of your current debts, including credit cards, student loans, medical debt and auto loans in order from the highest interest rate to the lowest.
• Pay the minimum on every bill you owe, except for the one with the highest interest rate.
• Once that bill is paid off, work down the list.

6. Take Out a Debt Consolidation Loan

If you have many high-interest debts, or hate making multiple payments each month, a personal debt consolidation loan can be beneficial.²

Debt consolidation lets you pay off what you owe with one payment each month, instead of several. You will have to apply to a bank or other type of reputable lender — and go through a credit approval process — before you can get your loan.

How CareCredit can help you pay for healthcare expenses

It may not be a good idea to eliminate or reduce the medical and dental services you pay for in order to pay down debt — as this might negatively impact your health and mental well-being. If you need healthcare and don't get it, you might also wind up owing more money in the long run. Instead, consider using the CareCredit credit card.*

Using your CareCredit credit card is an easy way to pay for medical and dental services you need. You can even use it to cover your pet's medical needs. To locate providers that accept CareCredit, use our Acceptance Locator or download the CareCredit Mobile App.

Author Bio

Corey Whelan is a freelance writer with 15 years of experience focusing on medical issues and health and wellness content. Her work has been featured in outlets such as Newsweek and Time, Inc.