At a Glance

There is nothing subtle about the glaring credit card balance in your bank account. However, making subtle tweaks is your ticket to being debt-free.

“Making a significant financial lifestyle change that you consistently execute takes time. If you want to improve, start small. It’s as simple as committing to writing down your expenses each day,” says Guadalupe Sanchez, personal finance expert and founder of Budgeting in Blue.

So if you’re feeling overwhelmed about the idea of paying off debt and don’t know where to start, you can start small knowing it’s exactly the right debt payoff strategy to increase your net worth one day at a time. Sanchez, who paid off her student loans by the time she was 29, knows a thing or two about this approach. Here are her best tips on reducing debt through little changes.

Automate payments

First things first, you’ll want to automate debt payments. “Think of your debt payment as a cell phone payment that has to be made each month no matter what. Connect your checking account and schedule automatic payments. The less you think about it, the better,” says Sanchez.

Make additional principal payments

She also stresses the importance of making additional principal payments. Don’t underestimate the amount of money you can save by putting just a bit more money towards paying down debt – we’re talking about thousands of dollars in interest: ”The principal is the amount you borrowed and has to be paid back no matter what, so it’s not like you’re paying money you don’t have to.”

“For example, if you want to save thousands of dollars on your total mortgage interest payment without changing the terms of the loan, all you have to do is make an additional principal payment each month. The additional principal payment can be as low as $25 and you will still save thousands on a 30-year fixed-rate mortgage.”

Reduce interest rate

It’s also possible to reduce your interest rate and pay less altogether, she adds. “It’s as simple as calling your loan provider or servicer and asking if they reduce your interest rate. Not all providers will reduce your rate but there’s a possibility they will. All it takes is a quick phone call.” If you don’t try, you’re leaving money on the table.

Work a few extra hours each month

Even if you’re on a yearly salary, considering a side hustle or part-time job that will bring you a few extra bucks every month is a small yet powerful move when it comes to paying off debt. “If you’re tight on money and want to make additional principal payments but can’t, work a few extra hours each month and apply that extra income to your debt,” says Sanchez.

Cut variable expenses budget

Fixed expenses are things like your rent or mortgage. On the other hand, variable expenses such as groceries, household and personal items are expenses you can control. And you can probably reduce some of them without feeling strained by tweaking things here and there.

“In my opinion, there’s usually at least one category you can spend less on. Take the time to see how much you’re spending on each and figure out which one you can cut back on,” according to Sanchez.

Never miss a payment

Finally, she recommends avoiding missing payments at all costs: “The worst thing you can do is miss a debt payment. This hurts your credit score, increases your total interest payment, and could mean paying late fees.”

All of these steps are not life changing and are actually so subtle you may not even feel like you are making a difference but after some time you will start to see an impact. Daily tweaks can have a big payoff if you commit to it.