Although debt is a necessary financial tool, it can become a burden if not well managed. However, there are some simple steps on how to reduce your debt if you are committed.

Almost everyone gets into debt at some stage in life. It may either be for consumption, investment, or taking care of an emergency. However, some manage their debts efficiently while it becomes a mountain to others.

Types of debts

Debts occur in various forms such as;

The type of debt to take depends on various factors such as credit score, availability of collateral, and needs.

There are also different types of institutions that offer loans such as banks, saccos, and shylocks.

Simple steps on how to reduce your debt

Debt reduction requires a plan and consistency. It is also a long-term strategy that needs the discipline to accomplish. Below are some simple steps on how to reduce your debt.

1.  Avoid getting into debt

It may sound crazy but avoiding getting into debt is one of the best ways to reduce your debt burden. You can’t have a debt challenge if you never got into it in the first place. Hence, stay away as much as you can unless it is necessary.

If you are already servicing a debt, focus on keeping away from topping it up to enable yourself a chance of reducing the current obligations.

Getting into more debt can only result in a deeper burden that will need even more time and money to clear. Hence, take some time off and this will be the start of your debt reduction

2.  Increase your installments

Most people with debt normally pay the bare minimum despite having a chance to increase the installment.

Mostly, loans are paid regularly such as monthly. This is what is called an installment. Increasing your installment results in a reduction in the repayment period. In effect, this reduces the amount of interest that you have to pay.

Remember the longer you pay your loan, the higher the amount of interest expense you have to incur. Hence, pay your debts as fast as you can to achieve some savings.

Paying a higher installment will also push you to work harder as you need more money to achieve this.

3.  Grow your income

If you are taking loans due to an increase in expenses, growing your income will greatly assist in reducing your debts.

This is a sure way as you will be making more to spend. There are various ways to grow your income such as investing. Some of the areas you can invest in include real estate, government bonds, and saccos. Learn more on how to invest in government bonds.

Alternatively, you can strive to earn more in your job through actions such as improving your skills and taking further education.

4. Take cheap credit

The cost of debt is one of the main factors that determine the burden. Hence, you should focus to get cheap credit to minimize finance costs. These costs are in form of interest, insurance, and processing fees.

You should target getting loans from legal and mainstream institutions such as banks and saccos as they have lower rates compared to other lenders such as shylocks.

Getting cheap debt makes it easier to reduce the overall debt amount.

5.  Live within your means

Most people are in debt due to living above their means. This is where your expenses far exceed your income. To avoid this, you should have an income plan that you stick to.

Getting debt for consumption is an expensive undertaking that could keep you in that status perpetually. Hence, start by reducing your expenses by cutting off items that you don’t need. Normally, you should spend your income on a 50:30:20 ratio.

This means 50% of your income should go towards paying for your needs.30% should go towards wants and the reminder 10% should be your savings.

With such a plan and discipline, helps you to live within your means and helps to avoid getting into more debt. If you are already in debt, start by cutting your expenses and your debt levels will start coming down.

Below is our recap on the simple steps on how to reduce your debt.

  1. Avoid getting into debt
  2. Increase your installments
  3. Grow your income
  4. Take cheap credit
  5. Live within your means


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