10 Easy Ways to Pay Off or Reduce Your Debt

Are you drowning in debt and struggling to find ways to pay it off? Don’t worry, you are not alone in this battle, as a recent study shows thatalmost 70% of the American households have some form of debt.

It may sound counter intuitive but paying off debt is actually a great way to earn passive income. By reducing debt interest that you pay out each month, you are effectively making more money.

Debt is like a weapon which can be used toeither create or destroy yourself. There are two kinds of debt that are primarily known as good debt and bad debt. The former one might be a business loan that you borrow from the bank to expand or grow your business/company, or a student loan that you can borrow from the government to improve your skill sets. The latter onegenerally includes car loans, payday loans or your credit card debt which can be classified as personal debt for your personal consumptions or pleasure that doesn’t generate any money or income.

In this article, we will suggest several ways to get rid of your bad debt and enjoy a stress-free life.


1. Focus on Increasing Your Income

The first and foremost step is to focus on increasing your income and not lowering your debt.
Ask yourself a question that “how long would it take to pay off all your debt by the money which you are making right now?” It will ensure if it is realistic or unrealistic to think that you can be debt free with your current income.

If it looks virtually impossible, you need to plan an additional income source, a side hustle that’ll make you more money. There are numerous opportunities in different niches which you can choose based on your interests to generate more income, such as freelance photography, content writing, teaching, industry consulting and many more.

2. List Your Debt by Interest Rate

It doesn’t matter what kind of debt you have such as personal loan, home loan, unsecured loan or a car loan. One must list all of them by interest rate in a sequence using ascending or descending order. The debt with the highest interest rate should be eliminated first by increasing the amount on your installments and the rest should be held on a minimum payment plan.

3. Sell Unnecessary Items

There’s a famous saying “if you buy things that you don’t need, you will have to sell things that you need” still, there are several unnecessary items in your house which you haven’t used for a long period of time, for instance, needless furniture, not-in-use old cell phones, electronic appliances, old laptops, cameras, books, musical instruments and sports equipment are the objects that have become a depreciating asset for you. There are numerous online platforms which you can use to sell off these things that will contribute in some of your installments.

4. Temporary Downsizing

A wise man will always buy appreciating assets and an unskillful man will more often than not either buy depreciating assets or liabilities.

If you are struggling to pay off your debt then you need to temporarily downsize yourself by quickly evaluating few expenses including gratification, dine out, entertainment, unnecessary monthly subscription services and non-value adding objects expenses. These are basic pricing means which if you can control, can add value to your monthly income and hence ultimately lead towards natural contributions in your monthly installments.

5. Always Have an Emergency Saving Fund

What is better than never having to take any debt?

In order to prevent yourself from acquiring any sort of loan, you need to have an emergency saving fund that you can add to your liquid debt or invest in equity. This cash can also be withdrawn at any time on a short notice and there are various funds in which you can seek a return as well. Always have some amount in your emergency saving fund and there is a probability that you would never feel the need for a loan.

6. Develop A Habit of Budgeting

The habit of budgeting is much profitable for every household if considered for a long-term. You must have a data-driven approach to your spending by keeping your intelligence above your emotion. A budget is merely your ability to plan and one must carefully analyze his/her expenditure of the previous few months and develop an excel sheet describing how much you are going to spend on various things. Develop a table of multiple columns involving categories, budgeted amount, spent amount and remaining amount. List your category table with electricity bills, groceries, rent, food, credit card, mortgage, loan, entertainment etc. The table should then be updated by entering your budgeted amount against these categories and the amount you have spent which will ultimately result in your remaining amount either in positive or negative. In this way, you will spend in a data-driven way which will help you in numerous manners and may even help you pay off your debt much more conveniently.

7. Use Additional Incentives for Debt

Whenever you earn or gain something extra from the means such as tax refund, by selling out your car, inheriting a property, winning a bet, bonus or any sudden additional incentive, they must not be used for leisure and amusement. The money should straightaway be used to ease your debt installments rather than your personal pleasure so you can enjoy your future debt-free life.

8. Freeze Your Credit Cards

The quest of paying off your debts and escaping out the burden of loans requires the removal of those Mastercards from your wallet so youdon’t get enticed to utilize them. Put them away, orfreeze them into a basin of ice until you have totally settled your extraordinary balances.

Paying for your purchases with money rather than a credit card will enable you to differentiate your requirements from needs. Stay mindful of your expenditure and influence yourself to reconsider and think twice before spending money.

9. Consider a Debt Consolidation Loan

If utilized correctly, debt consolidation loans and balance transfers can be astounding approaches to escape/reduce debt. Consider solidifying your debts with consolidation loans or adjusting your credit card balances to a low-rate credit card. Watchfully examine the terms, conditions, any hidden charges, and also the general interest savings so you can understand before you focus on this arrangement.

Cut up and drop your credit cards if you pick this alternative, else you might be persuaded to continue utilizing them and further increment your debt load.

Unfortunately, debt consolidation loans don’t appear to help most of the individuals. The reason is that the people don’t change their behaviors that created the debt in the first place. To excel using a debt consolidation loan, you need to make sure that you track your spending for no less than about fourteen days, make a financial plan, tail it, and ensure you’re not spending more than you earn or else you’ll end up like others who need another debt consolidation loan once they are done with using away their initial one.

10. Debt Advice Might Be A Good Option

In about every case, it is best to talk things through with an accomplished debt advisor before you choose how to square away those loans. The advisor can give advice about better ways of managing your money andenable you to settle on the correct choices with the goal that a large portion of your cash will go to paying off your debts.

There are many ways to contact a debt advisor like online, over a phone call or a face to face conversation. All you need to decide is the best one for you, and then take the first step to be debt free. Make sure you find someone who is legitimately focused on reducing debt and not offering various schemes to shuffle debt around.


The above-listed suggestions are basic guidelines and steps which you might be aware of in your conscious or unconsciousness but have failed to adopt so far. In order to be debt free and enjoy financial peace, start applying this framework today which will lead you to reduce and eventually paying off all your debt.This can be one of the simplest and best forms of passive income you can find! Best of luck!