New Year Goal: Reduce Debt

Is it time to get your finances in order? If you have taken the first step in getting things under control, then you’re ready to take another step toward your financial future. Before you start saving, you’ll want to have a plan for debt reduction.

That is where this article comes in. Today is the day to begin.

To reduce debt, and start saving, it is important to learn to live a bit more frugally. Follow the advice in other articles on this blog, be sure to subscribe to my Frugal Living channel, and visit my blog Frugal Recipes: Spending Less to Eat Healthy. I work hard on these resources in order to help you meet your goals.

Once you have your spending under control, you should find you have a little extra money. If you want to pay down debt with a bit larger sums of money, consider incorporating some of the frugal tips in the resources I shared above. For instance:

  • Learn to make your own cleaners for big savings.
  • Save even more by growing your own herbs, even if it has to be done on a windowsill.
  • Make homemade gifts for people.
  • Cook from scratch.
  • Save all your change, and the money from returnables, each month to add to the debt reduction pot.

There is so much you can do to live frugally, without feeling deprived, that will help you to meet your goals.

It does not matter how much you are paying down each week or month, just that you are. Do what you can. Begin with the smallest back bill you have. Getting that bill paid off will make you feel so good you’ll be able to start on the next highest bill feeling better about your financial future. (Take into consideration there may be bills you have to pay on each month while also paying off that smallest back bill.  This is fine. Just do the best you can. )

Get together a few items to start planning your debt reduction system:



Pencil with a good eraser




The bills you need to pay off


Address labels

Setting Up Your Notebook

  1.  Glue the envelope to the inside front cover of the notebook. This envelope will hold the bills as they come in, your address labels, and the stamps.
  2. Use two sheets of paper (both sides) for each bill, adding a tab to the first page for each.
  3. Deal with the bills you must make payments on first. Write the name of the bill at the top of the first page, then add the address, phone number and account number on the next lines. You may not always have a bill at the ready when you want to make a payment, so this information will help.
  4. Write the amount you still owe on the next line down, on the right of the page and underline it. Each time you make a payment, write the date to the left, with the check number if applicable, and the amount you paid.
  5. Subtract that amount from the previous balance, and write the new amount on the right side of that line, under the previous total.
  6. Write the name of each bill on the corresponding tab. You’ll have four pages for each bill.
  7. Do the same for the other bills. Be sure the lowest bill is placed after the last one you have to make payments on, then work your way up to the highest bill.
  8. Keep the notebook in the same place all the time, with a pencil and calculator, so you can easily update it with each transaction.
  9. Keep the information for a while once a bill is paid off, in case the bill collectors try to say a specific amount was not paid. You might also call each collector/place about a week after making the last payment. Then you can be sure they have received all payments and you are all set.
  10. Ask the person you talk to about them removing the debt information from your credit report when the bill is paid off. Maybe they can note that you had made consistent payments toward the debt reduction.
  11. Use the amount of money you had been using to pay down a bill you are done with to go toward another bill, until you get them all paid off.

You can do this as mentioned above, one bill at a time, or by paying on each bill every week or month. Whatever works best for your situation. It wont hurt to call each place and explain your situation, letting them know you will send what you can each month, or agreeing on a certain amount.

If you can pay everything off within a year, put all your extra money toward this goal. If it will take much longer (as is the case with many medical bills), then you may want to start saving money as well – if you can afford to do both.

Regardless of what debts you have, you’ll eventually have to retire. You might also end up without a job at some point, or seriously ill.  You’ll need money for these things, so putting all the extra money toward debt reduction may not be the best move.

Again, do what is best for your situation, but begin to pay things down. Set up a schedule for paying down debt, and feel good when each bill is paid. Try not to stress. If you need to miss a payment because you were sick or out of work for a short period of time, it is okay. If you are on a payment plan with someone, call and let them know. Just do the best you can, and be proud of your accomplishments.

Do you have something to add, or a story to tell? Share in the comments for this post, or email me personally at I reply to all comments and emails, and enjoy hearing from you.



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