Small Things You Can Do To Gradually Lower Your Debt, According To An Expert

Student loans, credit card balances, home mortgages — most of us have some form of debt. In fact, roughly 77% of American households hold at least one kind of debt, according to data from the Federal Reserve. But this four-letter d-word isn't always bad news for your finances. Debt can be beneficial when it's used to boost your wealth or earning power later in life or when it greatly improves your well-being, per Investopedia.

However, when your debt is out of control, your whole life can feel out of control too. Ballooning balances can make budgeting nearly impossible, and you might start to be turned away for essential loans (like when you need to buy a new car) or payment plans. And if you are offered credit, it may come with soaring interest rates.

To find out how to get a handle on debt once and for all, Glam turned to Dasha Kennedy, founder of @thebrokeblackgirl and a National Debt Relief financial wellness board member, for practical advice. Here are her no-nonsense tips to gradually chip away at debt, starting today.

Every month, you get another bill for your loan or credit card, asking you to pay up. When you're barely getting by, the best compromise might seem to be paying the minimum amount required — that way, you can hold on to as much cash as you can without worrying about your account defaulting. However, Dasha Kennedy warns against this line of thinking. "If you can afford it, paying more than the minimum payment on your debts can significantly reduce the time it takes to pay them off," she explains. Even paying a small amount more, such as an additional 10% or 20% of the requested payment amount, can get you out of debt months sooner than if you only give the minimum.

More importantly, you'll save money in the long run, even if you have to sacrifice a little more at first (which means now's a good time to watch your spending and focus on becoming a more mindful shopper). Kennedy says that when you pay more than the minimum listed on your bill, you'll reduce the amount of interest paid during the debt's lifespan — and depending on how much your debt amounts to and the interest rate you were given, this could result in thousands of dollars saved.

Money troubles can feel embarrassing and isolating to deal with, but the truth is you don't have to struggle alone. "It can be difficult to admit that you need assistance, but there are many resources available that can help you manage your debt and get back on track financially," says Dasha Kennedy. Finding support is especially critical if you were unexpectedly laid off from your job or are suffering from a similar hardship that has affected your ability to earn or save money.

If you're drowning in credit card charges, medical bills, and other debt, you may be eligible for government assistance, such as credit counseling or personal bankruptcy. However, Kennedy suggests exploring your options first. "Before filing for bankruptcy, there are resources and debt settlement companies like National Debt Relief, that can guide you through the process of becoming debt free so you can go back to living your life fully," she suggests.

Another way to ask for help when dealing with mounting debt is to go right to the source: the lenders and credit card companies. Even if they might be the last ones you'd prefer to talk to — especially if, like many, getting on the phone to talk about debt gives you the heebie-jeebies — you might be able to negotiate with them to lower your interest rates. "If you have a good payment history, they may be willing to work with you to reduce your rates," Dasha Kennedy shares. "This can save you a lot of money over the life of your debt."

When you contact your creditors, be sure to have evidence to support your request. Note your strengths as a borrower, such as never making a late payment or having a stellar credit score. Research the current interest rates offered by competitors, too, to see if yours is higher than average. Then, take a deep breath, pick up the phone, and make your case. If they don't agree right away, don't give up — ask what other benefits they can offer, or call back another time and try again.

Getting out of debt requires an organized strategy, and while there are multiple types to consider, Dasha Kennedy recommends the "snowball method" to those who are struggling to get started. The method, popularized by financial author Dave Ramsey, involves paying off your smallest debt (as in the debt that carries the lowest balance) first while only making the minimum payments on the others. Once the smallest debt is taken care of, tackle the next smallest, continuing until you've paid off everything.

Kennedy explains, "This approach allows you to see progress quickly, which can be motivating and encouraging." Consider it a two-in-one finance and psychology hack that can, she says, "build confidence and momentum, reduce stress and anxiety associated with debt, and have a clear plan of action and a sense of progress toward becoming debt-free."

To make the snowball method work, allocate as much extra money as you comfortably can to paying off your smaller debts — this might require creating a budget if you don't already have one. In the end, your frugality will be worth it once you see your balance hit zero.

Anyone dealing with debt and a paycheck-to-paycheck lifestyle knows that it can take only one extra expense to enter the red zone. Unfortunately, these expenses are often unplanned, like when you need to pay to get your car fixed or when you have to cover a costly visit to the emergency room.

If you're like most people — 56% of Americans, to be exact — you probably don't have enough saved in your bank account to afford a $1,000 emergency expense. That means if disaster strikes, you'll likely have to reach for a credit card or payday loan to cover your costs, landing you deeper in debt.

Dasha Kennedy says the way to fix this cycle is to invest in your future self by building a savings account: "[P]ut aside money for yourself first — before you put money toward your debts, bills, utilities, etc. Even if it's just $1 from every paycheck, practicing the idea of investing in yourself will help you build an emergency fund and a foundation of wealth building." Every little bit counts, and you'll thank yourself later if (or, rather, when) you run into unexpected costs.