So how do we bring that stack of debt down to earth?

The easiest way is to cut expenses and use the money to pay off debt. That’s also the hardest way.

“Many people are reluctant to cut expenses, as they simply believe it’s too hard,” said Anna Barker, of LogicalDollar, a money management firm “As we become used to living a certain way, the idea of making changes that may force us to cut back on things that we consider completely normal and essential to our lives is incomprehensible to a lot of us. At the same time, for many of us, carrying debt is also seen as completely normal — which it absolutely shouldn’t be. This is why any effort to cut expenses will also often have to be accompanied by a shift in mindset.”

Barker said reducing spending to achieve financial goals, including paying off debt, shouldn’t be seen as a sacrifice. “It’s better to look at it as being necessary in order to take control of our money.”

Here are some tips on reducing expenses so you can pay off debt.

1. Start Tracking Your Spending Habits


The first step to cutting spending is figuring out where the money is going. Tracking spending over 30 or 60 days will probably be an eye-opener. Who knew that much money was going toward your Kindle or Egg McMuffin habit?

“You may be surprised at how much you’ve spent on certain items, but this gives you a good chance to see just where adjustments are needed going forward,” Barker said.

The old-fashioned way to track is to write down every expense as you make it. That cumbersome exercise stops a lot of expense-cutters in their track. Fortunately, we live in the 21st century and technology can do our “writing down” for us.

If you pay for everything with a debit or credit card, check your statements.

Go through everything you spent money on and determine what you really needed and what were “wants.” One way to make things clear is to print out the statement and use different colored highlighters or pens to park different types of spending. Or write them down, under “needs” and “wants” headings.

Some financial institutions even have a graph or pie chart on debit card accounts with spending categories, showing where your money went.

If you do use cash, be sure to get receipts.

2. Get on a Budget


Creating a budget doesn’t have to be complicated. It’s simply a plan for where your money will go.

Barker said that “overcomplicating” is the biggest mistake people make when budgeting. Barker said budgeting can even mean separating spending into “needs,” “wants” and “goals,” rather than spelling out ever specific item.“That way, you’ll be able to monitor and adjust your overall spending in these categories as needed, making it far more manageable than having a more detailed budget,” she said.

She said it’s important to allocate money each month toward financial goals. Paying off debt should be a major objective. “Don’t be tempted to take money away from that to spend on other areas of your life,” she said. “Cutting your expenses in order to continue working towards your debt-free goal should be your priority.”

But small goals should also be included – they help measure success and achieving these milestones can help motivate you.

The three major steps for how to make a budget are:

Determine your income.
Determine fixed monthly bills – mortgage or rent, utilities, car payment, insurance, etc.
Determine needs — food, gas, medical expenses, etc.

What’s left over is your “discretionary spending.” Decide an amount out of that you can put in savings for an emergency fund, and also come up with a figure that can go toward paying off credit card debt.

There are a variety of apps and other resources that can help, and there are a variety of online budget tools and templates.

Once you’re done, it may seem as though there’s very little money left over for anything.

But now comes the fun part – figuring out how to trim the fat.

3. Cancel Unnecessary or Unused Subscriptions


Most people have monthly subscriptions for cable TV or streaming services, internet, cell phones, publications, weight loss programs, you name it. Once you set one up, you likely don’t think about it much, yet the money comes out of your account every month.

Now’s the time to take a close look. Ask yourself:

How much do I use this?
Do I really need this?
Can I live without this?

When you cancel the subscription, go through your email and unsubscribe to newsletters or regular advertisements that come from that source.

Don’t pass on unsubscribing to something because they make it hard, or it seems like a small expense that’s not worth the trouble to get rid of. Think of cutting expenses as death to debt by a thousand cuts, not one big blow. Don’t forget about your cable bill and cell service. Can you get a cheaper plan from another provider or downsize the plan you have? Consider cheaper TV alternatives – just be sure you don’t load up on too many streaming subscriptions.

4. Reduce Electricity Use


You have to heat or cool your home; you need power for lights and your other appliances. But there are many ways to lower your utility bills.

Electricity costs account for about 12% of the average household budget.

Some things you can do to cut those expenses are immediate: Don’t leave the computer running, don’t run the dishwasher without a full load, hang out the laundry instead of running the dryer, turn down the thermostat, reduce the temperature on your water heater. Shop around to see if there are utility providers that offer lower rates, particularly for fuel.

5. Prioritize Sustainability


Some of the best ways to cut expenses also will cut the footprint you leave on the environment.

The easiest step – and admittedly hardest – would be to visit thrift stores and purchase second-hand merchandise, including clothing.

Another admittedly difficult way to reduce expense and improve the environment is to ditch car payments and insurance and instead use public transportation. That includes riding your bicycle to a public transportation site and throwing it on the bus or subway when you’re going a good distance from home for work or for shopping excursions. Installing energy-efficient light bulbs, water-efficient appliances and turning off the water while you brush your teeth, will also help the environment as well as your wallet.

6. Lower Your Housing Expenses


One of your biggest expenses is likely housing – people whose income is below $50,000 a year spend an average of 36.6% or more of your income on housing. This is above the rule of thumb 30% recommended by financial experts. Lenders, when considering mortgage applications, like to see someone spend about 28% of their pre-tax income on housing.

Reducing housing expenses may seem like a nuclear option, but it is something worth considering and there are ways to downsize that may be easier than you think.

Renters have many options to save money on rent. Some are:

Get a roommate.
Give up a paid parking space.
Offer to do repairs yourself for a break in the rent.
Move to a cheaper apartment, or even a cheaper area of your region, or the country.

Options for those who own a home include:

Refinancing to get a lower interest rate and lower your monthly mortgage payment.
Remove private mortgage insurance. If you bought your house with less than 20% down payment, PMI is required. Once you have 20% equity, it’s removed. Even if you haven’t paid your mortgage down that much, check the home values in your area – if they’ve risen, so has the value of your home. If the value is high enough that you have 20% equity, you may ask your lender to cancel your PMI, and they must comply.
Sell your home and consider renting one instead. The advantages of renting a house include lower upfront costs, like taxes, insurance, maintenance and more.
Rent out your home, or a portion of it, as a short-term rental.

7. Consolidate Your Debt and Lower Interest Rates


One way to drastically cut expenses is to consolidate debt. If you have credit cards, those monthly payments could be eating up a big portion of your take-home pay. Check out the interest payments on the cards – likely it’s between 16% and 30%.

Debt consolidation means combining multiple debts into one monthly payment. The end goal is to reduce what you pay in interest and lower the monthly payment and pay the debt off.

Benefits of debt consolidation are:

One monthly payment. No more juggling multiple payments, it’s one and done with a good consolidation plan.
Lower interest rate. What you pay every month is going to reduce what you actually owe, not the constant build-up of interest.
Pay off debt faster. It takes about 20 years to pay off credit card debt if you’re just making the minimum payments. Debt consolidation will eliminate your debt in 3-5 years.

The two most common ways to consolidate debt are through a debt consolidation loan or using a debt management plan.

Debt Consolidation Loan

One way to consolidate debt is to take out a large loan from a bank or credit union to pay off the smaller debts. This method can be effective, but if you have a less-than-perfect payment history and low credit score, you may not get approved. If you do, the loan may have a high interest rate, which defeats the purpose.

Debt Management Plan

A debt management plan, from a nonprofit credit counseling agency like InCharge Debt Solutions, may be a good fit for someone looking for help with credit card debt. These plans don’t use credit scores for eligibility. Like a loan, debt is consolidated into one monthly payment. But unlike a loan, creditors offer lower interest rates to nonprofit credit counseling agencies, who pass them along to you. That translates into a lower monthly payment for you.

Counselors also help with that tough work of looking at your income and expenses and help you figure out a budget and payment that works for you.

8. Reduce Your Insurance Premiums


Adjustments to home and car insurance are another way to reduce monthly expenses.

If you pay both, shop around for companies that will bundle them for a cheaper rate. You may also be able to lower your rates based on what kind of homeowner or driver you are.

To save money on car insurance, check out companies that offer lower rates for a safe driving record, or for those who drive a cheaper car. Cars with enhanced safety features also can get lower rates.

Being a member of an organization like AAA is beneficial.

To save on homeowners insurance, check out your policy and see if your company offers reduced rates for making improvements. Installing smoke and carbon monoxide detectors and burglar alarms can mean discounts. So can upgrading electrical or heating systems.

Also, consider raising your deductible from $500 to $1,000, which can save 25% on your premium.

Shop around for insurance companies that may offer a better deal. Check out the National Association of Insurance Commissioners (NAIC.org), for tips on picking a good insurer. But also check out whether your insurer offers a discount if you’ve been with them for six years or more.

Barker, of LogicalDollar, also said that one of the biggest hidden expenses consumers don’t think about is automatic renewals for things like insurance.

“Many of us simply pay it and forget about it until next year,” she said. “However, by doing this, you’re losing the chance to either find a better offer from another provider or negotiate a discount with your current one. Next time you receive a renewal notice, do some research into what your provider’s competitors offer. You can then make a decision as to whether you’d like to switch or if you’d first prefer to try to use this information to get your current provider to match the other company’s offer.”

9. Eat at Home


Preparing and eating meals at home can save a lot of money.

Weekly meal planning can make it easy. Figure out what you will eat for the week, plan it, then stick to it.

The internet offers an endless variety of cooking and recipe tips, even for people who don’t consider themselves cooks.

If you don’t have time to prepare meals during the work week, make something on the weekend – a casserole, chili, a chicken dish – that will provide several meals. Portion it out into daily meal contains and all you have to do is grab and go. For longer-term convenience, make a hardy soup, chili or casserole, portion it into one-meal containers and freeze it, providing quick meals for busy days in the future.

The investment in half a dozen one-portion containers will pay off fast when you’re not going through the drive-through every night.

10. Shop with a List


There are a lot of ways to save money at the grocery store, but it all starts with a shopping list. This simple habit can end up cutting food expenses, help with meal planning and, if you stick to the list, cuts down on impulse buying.

It can be as simple or as complicated as you want to make it, and there are even apps that help you make lists and find bargains.

Some tips are:

Keep a running list during the week, plan your meals and add items to the list before you go.
Group the items on the list in categories (produce, deli, dairy, etc.) or even put them in order of where they are in the store. This will keep you from wandering down the candy or chips aisle, where expensive impulse buys lurk.
Comparison shop between brands and stores, though it’s cheaper to shop one or two stores rather than drive around the area looking for bargains at multiple stores.

Check out whether your grocery store has a rewards program, many of which offer discounts on store-brand items and target coupons to your regular buys. Gone are the days of clipping coupons – most rewards programs have an app, and if you have a smart phone, it’s as easy as scrolling before you go and punching your phone number in when you check out. There is even a list function on many, with an option for adding things you regularly buy.