8 Ways To Effectively Reduce Or Eliminate Debt (2024)

1. Break Your Pay Down Into A TIME VS. MONEY Comparison

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Time is the only nonrenewable resource. Break your pay down into how much it costs you per hour. For example, if you make $25 and want to purchase something that cost $200, that's 8 hours of pay (and of your day). Now ask yourself, is this time vs. money exchange really worth it or do you prefer to allocate my pay in another way (BARS)? If you decide against the purchase, decide whether or not it would be worth it to throw the money you thought about spending on a splurge towards your purpose. Ask yourself if you should allocate those funds to a major stressor in your life and knock out some debt sooner so that you'll eventually acquire more disposable income for the things you really want to do later in life. Instant gratification in a small sacrifice in the grand scheme of creating the life that you want.

2. Sleep On It

Give yourself a certain number of days to think before you make a purchase that is not a NECESSITY or an investment in bettering yourself. For example, anytime you make a purchase that is entertainment, clothing, or NOT need-based, sleep on it for three nights and then decide if you really need it. You may find most of your purchases are emotional.

Sitting with your feelings (taking note of what you are feeling or what happened when the urge to splurge comes up) and increasing your emotional intelligence will allow you to dodge making impulsive decisions to fill a void perhaps linked to a source of pain that may be outside of your awareness. For example, you don't have to be SEEN through what you wear to feel SEEN in a society that has marginalized you if it sets your bank account back and sends you down a slippery slope of guilt, shame, and avoidance. If no one has ever told you, you are enough just as you are. The rest is a luxury, and luxury my dear is meant to be comfortable.

3. Do A Subscription Review

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Monthly subscription services are all the rage. The problem? They add up quickly and many times we have them on autopilot, completely forgetting that it comes out of our account every month. Is this a coincidence or a brilliant sales strategy? Take a quarterly inventory of these and release yourself of the ones that you don't or rarely use or find more economical options and start allocating those autopayments to the debts you are looking to eliminate!

Common subscription service culprits include: gym memberships, Amazon, hair vitamins, themed box subscriptions that you really don't use, streaming services, lead generation if you're a business owner but aren't using the leads etc.

4. Try The SNOWBALL Effect

Or let's use the bowling ball analogy. Whichever you prefer, target a certain debt or "pin" that you want to knock down. A good way to select your "pin" is tackle the smallest debt or the one that is the biggest thorn in your side and greatest point of pain. Use the money you are saving in the tips above and begin to aggressively attack those debts. Once you've paid that one off, the monthly payment you had now becomes leverage to snowball into the next debt. Keep letting the (snow)ball roll until you have a domino effect and eventually you will be debt-free.

5. Consider A Balance Transfer

Dealing with bills

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Balance transfers are a great way to hit the reset button and help get out from under compounding interest where you're paying interest on yesterday's interest. A balance transfer allows you to reset your debt at 0% interest for 12 or 24 months (find the right introductory offer) with a fee. Make sure you have the funds available to attack the debt and pay off the WHOLE thing before the introductory period ends and set it up on autopay. Your future self will thank you for it. Your birthright is not to survive, but to THRIVE.

6. Make Autopay Your Friend

I talk to many people and clients who wait to pay their rent or credit cards until the last day because they don't want the creditor to have the money. Then what happens? They owe the creditor more money in fees because they forgot to pay it...sometimes requiring all the interest over the introductory period of no interest being called due. Hold yourself accountable and make autopay your friend. Don't let your ego get in the way and cost you more money that could go towards a debt.

7. Use Your Home As A Bank

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Now, if you are a Dave Ramsey fan, this might make you question your life. But the truth is, fixing your finances is not one size fits all. I have a lot of respect for Dave and agree with many of his principles. However, there are some that I disagree with... like requiring 20% down payment to purchase a house (not to mention missing out on free money through the form of DPA, down payment assistance). If you are buying in a good market, by the time you saved 20% for your down payment (or waited for a gift from your parents who don't have generational wealth to pass it to you), your home value could have increased significantly and you could be getting cash out for another investment. EQUITY is paper, and if you don't use it you lose it during downtimes.

If you are a responsible person who has a tendency to pay more than the minimum payment on your credit cards and debts, then this may be a great way for you to feel relief from massive monthly payments of credit cards and student loans.

8. Figure Out Who You Really Are, What You Really Want And What's Your Definition Of Success

This will allow you to be proactive and identify what debts if any are critical to your goals and dreams. If formal education is important to you, student loan debt may not be a bad idea. Just make sure the ROI (Return On Investment makes sense) based upon the field you are going into or going back to school for. Many of us can relate, I started out pre-med to achieve the highest level of formal education and took another direction. Never be afraid to reinvent yourself. Stay true to you. Life is about balance and is meant to be enjoyed. Hustling for our worth is hustling backwards. Trust me, I've been there and didn't even know the source until I got to the root of the need for my own validation and started to peel back the layers of my own money story.