Debt-Reducing Strategies To Become Financially Independent

Debt and borrowing can sometimes feel like a self-perpetuating cycle; it’s not uncommon to see people borrow money to pay off debt and end up deeper in debt. Even if you haven’t opened any new accounts, outstanding debt can linger at the back of your mind, affecting purchase and life decisions.

It’s important to remember that this is temporary. With the right debt-reduction strategies, it is absolutely possible to work your way through it and become debt-free. Here are some tips to help you manage your debt and improve your financial standing.

1. Assess Your Financial Situation

The first step to resolving your situation is to take a hard look at your finances. Start by listing all your debts and work out how much that comes to in terms of monthly payments. Compare that to your income; if you don’t have a stable income, come up with an average figure that you’re comfortable relying on.

Now ask yourself: can you make the minimum monthly payments on your debt? If your income minus your expenses allows you to cover that, that’s a good first step in your debt reduction strategy. You might also want to look at your credit report. If you have a decent credit score or a history of paying debts on time, your current creditors might even be willing to lower your interest rates.

2. Implement Smart Budgeting

Conscious budgeting is crucial to becoming debt-free. Once you have an idea of how much you have to pay each month, you’ve laid the foundation for a budget. If you have any income left over after expenses and debt payments, you can think about allocating more towards your debt-reduction strategy each month. This is good for systematically reducing your debt over time.

Plan out exactly how many monthly debt payments you’ll have to make before you’re finally debt-free. Consider making savings where you can during those months so you can become debt-free quicker.   

3. Consolidate Debt

Lots of lenders offer debt consolidation loans, which is exactly what it sounds like. You can lump all your high-interest debt from your credit cards and other sources together in one fixed-interest loan. This means that instead of making multiple debt payments each month, you’re making just one.

Debt consolidation is a popular and effective debt-reducing strategy to eliminate multiple high-interest credit card payments into one payment. With the right loan option, debt consolidation can help you significantly lower your monthly payments and save you thousands a year.

4. Apply for a Balance Transfer Card

A balance transfer card lets you move your existing credit card balances to a new card. Many even offer a promotional 0% APR rate, which means you can pay down your credit card debt without the interest.

Typically, the promotional rate is offered for six to 21 months. This is a sizable period of time and can prove key to your debt-reduction strategy. You’ll likely need very good credit in order to qualify for a 0% balance transfer card. Furthermore, you should also make sure you can pay off your credit card debt within the stipulated promotion period so that you’re not stuck paying high interest rates after the promotion ends.

5. Find a Debt Counselor

If your debts prove too much to handle, consider getting professional advice on how to reduce them. You’ll find lots of credit counselors working for nonprofits who will outline debt-reducing strategies to help you pay off what you owe within a few years. They often charge very low fees or even work for free.

In certain cases, your counselor can even reach out to your creditors on your behalf to negotiate your debts and help you resolve your situation quicker.

Trust in a Reputed Lender To Become Debt-Free

Lending Tower is a top-rated consumer finance lender that has helped thousands of customers across the U.S. achieve financial independence. We pride ourselves on taking an approach to lending that puts your needs first. We provide tailored personal and debt consolidation loan options at highly competitive rates. Lending Tower makes funding available to you as soon as possible. You can pick up the phone and talk to one of our trained loan advisors 24/7 to discuss your options and debt-reduction strategies.