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I’ve seen it time and time again.

Family #1 manages to pay off $35,000 in 2 years on a $40,000 income. Family #2 makes over $100,000 a year but can’t seem to make a dent in their $35,000 debt.

One of these families is on the path to becoming debt-free. The other is making the same mistakes over and over.

How come?

The second family has fallen into the lifestyle inflation trap. As their income goes up, their expenses rise to match it.

The first family is breaking the cycle by making adjustments and establishing better habits.

So, what are the best debt reduction strategies successful people use to become debt-free?

Let’s find out.

Step 1: Add up all your debt

woman writing her budget as one of her debt reduction strategies

Want to know something?

80% of the people I talk to have no idea how much debt they have.

So I hear things like this a lot:

“I think I’ve got about $30,000 worth of debt.”

But I know the feeling. Sitting down and adding up your debt isn’t fun. Let’s be honest – it sucks.


But here’s something you should know:

Knowledge is power. And getting absolutely clear on your numbers is the first step in taking back control of your financial life.

So your first step in learning how to get out of debt quickly is to sit down and tally it up. You’ll want to break down each debt into 2 categories:

1. The amount owed
2. The minimum monthly payment required

Here’s an example of how that looks:

debt written on notecard as one of the debt reduction strategies

Once you’re clear on your numbers, then you’ll move on to the next step. Don’t worry, we’ll recap this list of debt reduction strategies at the bottom of this article.


Step 2: Build a $1,000 emergency fund

car accident

Do you ever feel like unexpected expenses are always popping up?

The car battery dies. The water heater goes out. A vet visit comes up.

It can feel like it never ends.

But what’s worse?

If you don’t have an emergency fund, then you have 2 problems: the original emergency and a money problem. 


So your emergency fund is like the shock absorber between you and life. You’ll still have car repairs and other unexpected expenses, but they won’t send your financial life into shambles.

So here’s what you do:

Build a $1,000 emergency fund ASAP. Work overtime, sell things you don’t need, cut costs – do whatever you have to do to build this safety net for yourself.


Here are a few tips to make saving $1,000 easier:

1. Use Rakuten to save while you spend

Rakuten is a cashback app that pays you cash back for shopping online.

For example, Amazon gives you up to 5% cashback on your order through Rakuten. Verizon gives you up to $75 cashback. I’ve earned over $1,000 since joining Rakuten.

All you do is sign up for a free account and use the search bar to find your retailer.

Here’s how that looks:

rakuten homepage

Once it’s time to get paid, Rakuten sends your money via Paypal or direct check.

Note: Rakuten gives you a $10 welcome bonus for signing up and shopping.

2. Lower your interest rates

Have you ever looked at your payment and realized most of your money went towards interest instead of principal?

Not a good feeling.

But if you’re dealing with a high-interest rate, then you can use a company like Credible to lower your interest rate. It’s completely free.

For credit cards and other debt, Credible will match you with a better personal loan. This new loan comes with a lower interest rate and monthly payment.

You’ll then transfer your high-interest debt over to the personal loan and enjoy the savings.

According to their research, Credible users save an average of $18,886 over the life of their loans. So I knew I had to include Credible in this list of debt reduction strategies.

If you have student loans, you can use Credible to refinance them.

Refinancing your student loans means your old loan(s) will be paid off and you’ll get a new loan with a better interest rate. I recommend choosing a lower fixed APR instead of variable. 


Step 3: Manage your finances in one place

man using his cellphone as one of his debt reduction strategies

If you’ve heard it once, you’ve heard it a thousand times:

You have to manage your money.

But I’ll be honest with you. It’s hard to manage your money when you don’t know where to start.


That’s why I recommend using the Easy Money Toolkit. This financial spreadsheet comes with everything you need to take back control of your financial life.

Here’s what you’ll get:

1. Budgeting Template
2. Bill Pay Checklist
3. Debt Breakdown
4. Savings Tracker

This spreadsheet helped me become aware of the bad spending habits that were holding me back. I went from never saving any money to saving my first $10k. Plus, it’s helpful for when you’re learning how to become debt free on a low income.

budgeting spreadsheet for virtual assistants
(Above: The Budgeting Template from our Easy Money Toolkit)

savings tracker for virtual assistants
(Above: The Savings Tracker from our Easy Money Toolkit)

debt snowball spreadsheet
(Above: The Debt Breakdown template from our Easy Money Toolkit)

bill pay checklist gif
(Above: The Bill Pay Checklist from our Easy Money Toolkit)

Click here to read more about the financial spreadsheet.


Step 4: Start the Debt Snowball

couple budgeting as one of their debt reduction strategies

Two of the most important things you need during your debt payoff journey is a plan and the motivation to achieve it. 

Do you ever feel stuck with your debt? Like it’s just a fact of life that you’ll be dealing with for the next 10 or 20 years?

Paying off debt already feels like a l-o-n-g process and it’s easy to get so stuck in your own head that you feel trapped by it.


Let’s break the cycle with these debt reduction strategies. Let’s talk about the debt snowball method.

Here’s how it works:

Step 1: List your debts from smallest balance to largest balance (everything except your mortgage)

Step 2: Throw as much money as you can towards the smallest balance. Make minimum payments on the other debts.

Step 3: Once the smallest debt is paid off, take the monthly payment you were paying on it and add it to the next smallest debt.

Want to see an example of how this works?

Let’s say you’ve got 3 debts:

debt written on notecard as one of the debt reduction strategies

And you’re able to throw $350/mo at your Discover card. The American Express and Car Loan only get minimum monthly payments.

Once the Discover card is paid off, you’ll add the $350 to the American Express.

$350 Discover payment + $50 American Express minimum payment = $400 new payment

You see how the American Express is now getting a whopping $400/mo thrown at it each month?

That’s why this method is called the debt snowball. When you pay one debt off, then you combine that payment with the next one. The debt snowball payment grows larger and larger until it’s a full-blown boulder by the end of it.

So for this example, after the American Express is paid off, you would add its $400 payment to the car loan minimum payment:

$400 American Express + $350 car loan minimum payment = $750 new payment

This plan works because it gives you motivation. Once you knock out the small debts, you’re able to tell yourself you can do it.

Thanks to Dave Ramsey and The Total Money Makeover, the debt snowball has been one of the key debt reduction strategies for helping 5 million people become debt-free.

Are you next?


Step 5: Make biweekly payments

woman calculating bills as one of her debt reduction strategies

Want to hear my favorite uncommon debt tip?

Split your monthly payments in half and pay every other week.

So if you pay $400/mo, then you’d half it and start paying $200 every 2 weeks.

This is called making biweekly payments. And you can use this alongside the debt snowball method to get out of debt faster.


Here’s why this works:

These biweekly payments equal out to 26 half payments each year – or 13 full payments. Compare that to the regular payment method where you only make 12 full payments each year.

Yep, you’ll have an extra payment go towards your debt each year just by making biweekly payments.


Want to see how this looks on a graph?

The picture below shows the traditional payment method in green and the biweekly method in orange:

biweekly payment method as one of the debt reduction strategies 

See how the debt got paid off faster with the biweekly method?

This trick is so simple. Just fix the way you make payments.

Quick note: Make sure your lender implements your payments correctly.

Meaning, you want your 2nd payment to go towards your balance instead of forwarded to your next monthly statement. You can double-check by logging into your account or by calling your lender directly.


Step 6: Supplement your income

man using laptop

One thing is true when it comes to getting out of debt:

Spend less or earn more.

But why not do both? You don’t have to bring in an extra $1,000 a month to make a dent in your debt.

Let’s say you have a $10,000 loan with an 8% interest rate.

If you paid $300 each month towards that loan, it would take you 3.15 years to pay it off. But if you paid $425 each month, it’d only take 2.14 years.

You see?

That extra $125 each month gave you a year of your life back. Sometimes the best debt reduction strategies are small but powerful.


So let me ask you:

How many of us blow $125 each month on eating out, subscription services or lord knows what else?

We’ve all been there. But all you need is a little mindset shift to make a difference.

And if you want ideas on working from home, check out our article on How I Made $5,500 Last Month From Home.

In the meantime, let’s talk about 4 ways to spend less:

1. Save money on groceries – without coupons

Raise your hand if your grocery bill is always higher than you want it to be.

Me too.

And when stuff hit the fan and I knew I needed to get my financial life in order, I committed to lowering my grocery bill.


I tried couponing. I tried buying less meat. I tried other stuff.

Those things helped. But what made the most difference (and how I cut my grocery bill in half) was the $5 meal system.

The $5 meal program has hundreds of quick, easy, and delicious meal ideas that cost $5 or less. So for a family of 4, the $5 meals only cost about $1.25 per person.

Erin Chase, the founder, created the program after years of successfully feeding her family of 6 on $5 per meal.


It comes with recipe ideas for breakfast, lunch, and dinner. It also includes dairy-free, vegetarian, and gluten-free options. I’ve saved $3,600 each year with this system.

But what I love about it more than anything is that it’s saved me so. much. time.

Each weekly plan comes with its own printable shopping list. When I select the meals I plan to cook, it automatically adds the ingredients to my shopping list.

Check it out:

shopping list

You just print the shopping list or pull it up on your phone when you’re ready to shop.

$5 meal plans offers a 14-day free trial. After that, it’s only $5 per month.

If you’re anything like me, it will easily pay for itself in the first week – both in time and money. That’s why it’s one of my favorite debt reduction strategies.

Click here to try your free trial.

2. Use the Honey Browser Extension

The honey browser extension automatically scans the web for coupon codes. If Honey finds a coupon code, it’ll ask you if you want to apply the coupon code to your order.

Here’s how the popup looks:

honey browser extension as one of the debt reduction strategies

You know what that means. No more hunting for coupon codes yourself.

Oh, and did I mention it’s free?

I love stacking coupon codes from Honey with Rakuten. It’s a great way to double your savings.

Click here to sign up for Honey.

Click here to sign up for Rakuten.

3. Let BillCutterz lower your bills

BillCutterz is a company that negotiates your bills for you. All you do is fill out a form and snap a picture of your last monthly statement.

Then their team of experts will negotiate for hidden discounts and promo rates on your behalf. BillCutterz is free to use. If they’re successful in lowering your bills, they split the savings with you 50/50.

The average person saves $2,500 per year through BillCutterz.

It works for different types of bills, including:

  • Cell Phone
  • Cable & Satellite TV
  • Internet
  • Landline Telephone
  • Bundles (Cable / Phone / Internet)
  • Alarm & Security
  • Satellite Radio
  • Electricity

4. Save on insurance

Searching for better rates can be a hassle. That’s why it’s easier to stick with the same provider. But, that’s also what costs us in the long run.

Here’s the thing:

EverQuote has made comparing insurance rates easy. You just fill out a form and within 2 minutes you’re able to compare different providers.

According to EverQuote, the average user saves $536 each year on car insurance. It’s free to use. Plus, it lets you compare home and life insurance, too.


Step 7: Join an online community

woman using her cellphone

Earlier I talked about the importance of motivation as one of your debt reduction strategies. A big part of this includes having a support system.

But here’s the thing:

Most people who say they’d like to get out of debt never actually do.


They buy the latest iPhone all while still wanting “to get out of debt.”

They go out and finance a car that’s more than half their annual income all while still wanting “to get out of debt.”

They keep the never-ending payments.

But you’re different. And this means you’re probably in the same boat I once was. You want a support system of like-minded people, but you don’t have a lot of options in your area.


My advice?

Join an online community.

I’m a big fan of Dave Ramsey’s Facebook group. If you’ve never heard of Dave Ramsey, he’s like a long lost Uncle that gives you the financial advice you never heard growing up.

He’s also not afraid to give you a kick in the ass when you need it.

He has a book called the Total Money Makeover where he covers a 7 step financial process for winning with money.

He calls them the 7 baby steps:

Baby Step 1: Save $1,000 cash in a beginner emergency fund

Baby Step 2: Use the debt snowball to pay off all your debt except for your house

Baby Step 3: Save a fully-funded emergency fund of 3 to 6 months of expenses

Baby Step 4: Invest 15% of your household income into retirement

Baby Step 5: Start saving for kids’ college

Baby Step 6: Pay off your home early

Baby Step 7: Build wealth and donate!

Aside from that, he has a Facebook group with over 200,000 active members who are becoming debt-free.


Dave also hosts the 3rd most popular radio show in the country. He’s helped millions of people get out of debt.

Every day, people visit his radio show to do their official “debt-free scream”

If you’ve never seen a debt-free scream done on the Dave Ramsey show, then check this one out:


Recapping these debt reduction strategies:

1. Add up your debt

I know this step stings, but knowledge is power, so get absolutely clear on the amount you owe.

2. Save $1,000 for an emergency fund

Use a cashback app like Rakuten to save while you spend and lower your interest rates through Credible.

3. Manage your finances in one place

Use our Easy Money Toolkit to take back control of your finances.

4. Start the debt snowball method

List your debts from smallest to largest balance (everything except your mortgage). Attack the debt with the smallest balance first while making minimum payments on your other debt.

Keep working your way up until you’re debt-free.

5. Make biweekly payments

Split your payments into half each month and you’ll be making an extra debt payment each year.

So if you pay $500/mo, then split it into $250 every other week.

6. Supplement your income

Read our article on making money from home.

Then save money in 4 ways:

7. Join an online community

Finding a community of like-minded people in your area can be hard. I recommend joining a Facebook group like this one.

I also recommend listening to Dave Ramsey and picking up a copy of the Total Money Makeover.

Thanks for reading.

When you feel like you're drowning in debt, you need these powerful debt tools to help you become debt free. Use these 7 debt reduction strategies to get out of credit card debt and student loans. Includes a debt tracker and debt spreadsheet. Learn how to manage your debt. #debt #debttracker #debtspreadsheet


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