Reduce debt stress, mobile view banner, Oct 2023 blogs

Reducing Debt, Reducing Stress

People borrow money for all sorts of things. We use credit to buy a new car or home, pay for college, for travel and to pay for holiday shopping. It’s an acceptable way to obtain things now and pay them back later. Carrying debt, however, can create financial stress for borrowers, even if they can easily afford the monthly payments to pay back the loans.

Fortunately, there are steps you can take to reduce or eliminate debt so you’ll feel better about your personal finances. By creating a financial plan that pays your bills, covers your living expenses, and strengthens your savings, you will gain greater peace of mind about your overall financial wellness.

In this blog, we will provide you with steps on how to reduce debt so you can reduce stress.

Take a Financial Snapshot

The first step in taking control of your money is to take a financial assessment. You’ll need a clear understanding of where your money goes each month so you can create an accurate budget that includes paying down debt.

According to Experian, by reviewing your expenses you will be able to track spending habits and identify where you have wastefully spent. These are things such as a gym membership you no longer utilize or subscriptions to streaming services that you seldom use.

An assessment gives you an idea where you stand. It also shows you where you can cut spending and use that money to pay down your debt faster. Travis Credit Union offers an online financial assessment that can get you started.

Create a Budget

Once you know where all of your money goes, you can create a budget that focuses on reducing your debt. An ideal budget will allow you to pay bills comfortably, pay down debt and set aside money for regular savings. suggests utilizing the 50/30/20 rule for budgeting, which means that you will utilize 50% of your income for necessary living expenses, 30% for wants and the remaining 20% for saving and paying down debt.

Pay Bills on Time

With a new budget in hand, it is time to execute your financial plan. Commit yourself to paying your bills on time. Along with lowering your loan balances, on-time monthly payments help improve your credit score by building a strong payment history.

If you must, start by paying at least the minimum payment due to keep your loan accounts in good standing, says Your credit score will be negatively affected if you don’t pay the minimum amount due. Also, the higher your credit score, the greater chance of receiving a lower rate on any money you borrow in the future.

Tackle Debt Wisely

When it comes to paying down your debt, there are various strategies you can use, no matter how many loans you have or how much you owe. Here are some of methods you might find useful for tackling debt.

  • Focus on the Highest APR First: Also known as the debt avalanche plan, this strategy prioritizes paying more on the accounts with the highest annual percentage rates. The higher the APR, the less of your money goes to paying down your loan balance each month. This is usually the case with balances on variable-rate credit cards. Paying more allows you to lower your balance faster so you’ll pay less interest over time, says
  • Pay more than the Minimum: Paying more than the minimum amount due is a good strategy to reduce debt because you are lowering the principal balance owed. For example, a credit card with a $15,000 balance and a 17% APR will have a $450 minimum payment. According to, it will take almost four years to pay off this card making minimum payments and you’ll pay about $5,500 in total interest.

    Compare that to if you paid $100 more each month, or $550. You’ll repay the debt in less than three years and pay $4,100 in total interest. This strategy saves you significantly overall.
  • Consolidate debt: If you have multiple debt accounts, consider consolidating your debt into a single monthly payment with a single rate. There are several ways to combine your debt. If you’re a homeowner, you can tap into your home’s equity for a home equity loan. Also, many lenders offer debt consolidation loans.

    Another option is credit cards that offer a 0% APR introductory offer on balance transfers. These allow you to move your debt onto a single account with no interest for the introductory period. Just be sure you pay off your balance before this period ends.
  • Pay off the lowest balances first: This method focuses on paying more on the smallest loan first so you can pay it off quicker. Once that loan is paid off, apply those freed up monthly payments as part of the next loan payment until that one is paid off. Known as a debt snowball, you’ll continue to build a bigger monthly payment on each loan until they are all paid off.

Once You Are Debt Free

Stick with a strategy until you eliminate most, or all, of your debt. Once your debt free, apply the money you used for monthly payments toward building a financial nest egg so that you can tap into your savings instead of borrowing money the next time you need it.

Travis Credit Union has a variety of debt consolidation and savings products that can help you on your path toward financial wellness. For example, our Personal Loan is great for debt consolidation. It offers a competitive fixed rate with no prepayment penalties and terms from 12 to 60 months. Our TCU Platinum Visa is also another way to consolidate debt. Check to see if you’re pre-qualified for one today.

Once you’re ready to save more, TCU has Certificates and Money Market Accounts that can grow your money faster. We also offer wealth management services, too.

TCU can help you learn more about how to take control of your finances, so you’ll have less stress over debt. Visit our Financial Wellness Hub to get started or visit us at

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