How Can I Get My Debt Payments Down?

Not being able to make your debt payments can be stressful, but you have options to get back on track. Learn some of the best ways to work on your debt.
A stressed out couple sits at their computer and discusses their debts.
Edited by:
Kristin Marino verified

Debt can pile up on you, and when it does it can feel overwhelming. But you can get your debt payments down. If you are struggling to keep up with debt payments or find yourself falling behind here are some specific ways that you can reduce debt and get your payments under control.

Use Your Tax Refund for Reducing Debt

Tax refunds can be nice because they provide you with money beyond what you are accustomed to having on hand from your paycheck. Many people use tax refunds for vacations, home repairs, or other one-time purchases. But they can also be used for debt management.

Consider using your refund to pay down your debt. If you can, use the refund to pay off a debt on which the balance is low enough so you eliminate the payment on that debt completely.

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Stop Borrowing

If you are having a hard time making payments on your current debt, having more is just going to make it worse. Consider how you accumulated the debt to begin with. If you find yourself constantly borrowing money to buy things then you may need to re-evaluate your money habits.

Pay More Than the Minimum

It is tempting to make the minimum required payment on your debt. That may be especially true when you already feel the pinch on your budget. However, by paying more than the minimum payment you’ll speed up the time until your debt is paid off and save yourself some interest too.

Get Help With Debt Management

A trustworthy credit counseling service can help you get on track with managing your debt. You’ll also learn how to not take on more debt in the future. In some cases, you may even be able to negotiate with creditors to accept less than what you owe as payment in total.

Having a debt settled for less than what you owe can reduce your credit score. This is because a settled debt will show up as paid off for less than you owed on it. But if you’re already struggling to make payments, your credit score might not matter, since you can’t take on more credit anyways.

Canceled debt can also be taxable. Make sure you take into account what your tax bill will be before you accept any form of debt relief.

Shop Around for the Best Deal

No, don’t go shopping for more stuff. But if you’re considering using a debt consolidation loan, be sure to compare interest rates and terms from several lenders to find the best loan for you.

A debt consolidation loan can enable you to put your debts into one loan that could have a lower interest rate than what you’re paying on your debts separately. This could mean a lower payment in total and the ability to pay off your debt in a shorter period of time. Use an installment loan calculator to see if consolidating your debt makes sense and lowers your payment.

AmONE makes it easy to shop around and find the best debt consolidation loan for you.

Track Your Budget

For many people, the lack of a clear budget is often the culprit for having too much debt. If that’s the case then paying off your debt will only put you back to square one and it’s very likely you’ll just take on more debt. Create a budget that compares your spending to your income. If your spending regularly exceeds your income then there is a problem. Look for ways to reduce your spending so that it stays below your income. Common culprits for excessive spending include:

  • Dining out
  • Travel
  • Forgotten or unused subscriptions
  • Brand-name products

If you can identify and eliminate any of these items from your budget then you can use the difference to pay down debt and save.

Make More Money

Making more money is sometimes easier said than done. However, the reality is that debt accumulation is the result of spending more than you make. People often focus on the spending side of that equation and may not think about how their income could change.

The biggest salary increases are likely to come from making major career moves, but you may be able to work a few extra hours each week or pick up an additional shift. Use the extra income to pay down your debt, then go back to working your regular hours when the debt is gone.

Pay off Your Highest Interest Debt First

Interest charges make paying off your debt more difficult. Higher interest rates mean that less of your payment goes toward paying down your balance. If you have multiple different debt balances, try to make extra payments on the balance with the highest interest rate first. That way, it will be paid off faster and you’ll owe less interest over time.

Then, you can divert the money you were using to pay off that loan toward paying off the debt with the next highest interest rate.

Pay off Your Lowest Balance Debt First

If your highest debt has a big balance and you feel like it will take forever to pay it off, try a different tactic. Instead of paying off our balance with the highest interest rate, you may want to try paying off your debt with the lowest balance first. The idea behind this strategy is that you’ll be able to completely pay the debt off faster, which could be motivating and encourage you to stick with your debt reduction plan.

Once you pay off the debt with the smallest balance, use the money that was going toward paying off that loan to pay down your debt with the next lowest balance.

Sell Your Car

This won’t be a good strategy for everyone but is a particularly good tactic for people who have a more expensive car than they need.

If you are driving a brand-new, newer, or luxury car, consider selling it and replacing it with a used and less luxurious car. That doesn’t mean you have to buy a junker. Moderately used vehicles that have been well cared for often have a lot of life left in them and cost far less.

You can use the money you make selling your car to buy a used vehicle and any remaining money can be applied to your debt.