5 Easy Steps to Tackle Your Debt While Saving

Debt can be a heavy weight on your finances. It can hinder your spending in the short term and cause your savings to fall far behind in the long term. Fortunately, by making a few financially savvy decisions, it’s not impossible to pay off debt while contributing regularly to your savings.

Follow these five easy steps from Bank of America’s Better Money Habits to tackle your debt and reach your savings goals:

  1. Find out how much money you owe.

The first step to reducing debt is to find out exactly how much you owe. Though it may seem a little daunting at first, calculating your total debt will give you a sense of where you’re starting and help you create a realistic plan of action.

To stay organized, create a list that includes your creditor’s name, the total amount due, the minimum payment required, and the monthly due date. Having this list will help you stay on top of your monthly bills.

  1. Create a budget to determine how much you can save.

Creating a budget is one of the most effective ways to manage your money. To start, calculate your monthly expenses. Be sure to include your rent or mortgage, car expenses, utility bills, food, and the minimum payment for each of your debt repayments. Be sure to include a line for your savings deposit so you can continue to work towards your savings goals while you pay down your debt. Tally it up and subtract it from your total monthly income.

If you have money leftover, you can also include your regular spending on things like clothes or entertainment in your budget. If there’s no wiggle room, you might want to cut back, whether you cancel cable or other monthly subscriptions that you don’t need, negotiate a more affordable phone plan, or reduce how often you go out to eat. >> Learn more about budgeting.

  1. Contact your creditors to explore repayment options.

You may be able to negotiate a more affordable payment plan with your lenders. Make a phone call to find out your options. Student loans, for example, might offer an option for income-based repayment or a means to apply for forbearance, which may buy you time before your next payment is due. If you have a large outstanding balance on a utility bill, most gas and electric companies are also willing to work with you and create a payment plan. >> Learn about student loan repayment.

  1. Set a goal and make a plan. 

Now that you’ve done the legwork, you can safely say that your goal is to pay off debt. We know that savers with a plan are twice as likely to save successfully, but the same can be said of paying down debt. 

While you continue to make the minimum monthly payment on your other debt, plan to pay a little extra each month on your highest interest bills. Interest accrues each month so the longer you wait to pay down your high interest debt, the more money you’ll owe in the long run.

Once you’re able to pay your balance in full, you’ll have one less bill to worry about.

Give yourself a realistic timeline for when you’d like to pay down each bill and stick to it. Even when the going gets tough, pay the minimum balance on time to avoid damaging your credit score over time.

  1. Commit to your goals.

Taking the America Saves pledge will help you reach your savings goals. When you commit to your goals through the pledge, you will receive text message reminders to make your savings deposits. We also send you helpful savings tips and resources to help you reach your goals!

Sign up is easy: you tell us how much money you want to save each month and how long you want to save for, and we’ll encourage you to reach your goals! >> Take the America Saves pledge.


Let America Saves help you save money. It all starts when you make a commitment to yourself to save. Take the first step today and take the America Saves pledge to save money, reduce debt, and build wealth over time. And it doesn't stop there. America Saves will keep you motivated with information, advice, tips, and reminders to help you reach your goal. Think of us as your own personal support system.

TAKE THE PLEDGE


Feeling overwhelmed with debt? Good news, you can get out of debt AND build your savings with these easy steps from @AmericaSaves! https://bit.ly/2L7uaBX 

  Tweet this now

Take the Pledge

I pledge to save money, reduce debt, and build wealth over time. I will encourage my family and friends to do the same

Take the America Saves Pledge

Tip of the Day

  • Written by Katie Bryan | December 23, 2013

    Tip to Save During the Holidays: Decide how much you can spend. http://ow.ly/pX9nu via @Bankrate

Saver Stories View all »

Transforming “I Can’t Save” to “I Will Save”

Written by Guest Blogger | January 13, 2016

You will not believe what it took to completely change my life. About three years ago, the HR Administrator of the corporation where I worked (as a temp with no benefits) forwarded an email to me. Fifteen seconds. One small act of kindness. That's it - that's all it took!

Read more...

Another Dream Realized

Written by Tammy G. Bruzon | November 7, 2014

Mary Brown was already a disciplined individual when she came to Wisconsin Saves coordinator Wisconsin Women’s Business Initiative Corporation (WWBIC) in last summer. She had successfully completed her bachelor’s degree with the assistance of her husband and son, and was now ready to tackle her next big dream – homeownership.

Read more...

Coping with a Lost Job

Written by Katie Bryan | October 28, 2013

Aimee Shaffer worked as a Public Service News Director for radio for years until one day her employer downsized the company, resulting in hundreds of lost jobs, including Aimee’s.

Read more...

Receive Updates

Sign up for Texts

Written by Tammy G. Bruzon | July 15, 2014

Sign Up

Sign up for Emails

Written by Super User | September 16, 2013

Get Emails

Take the Pledge

Written by Super User | September 16, 2013

Start Saving