Reduce Debt by Saving Balance

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If you are buried neck deep in debt and struggling hard to make ends meet, it's natural for you to wonder if you'll ever be able to settle your debts as well as save enough for a secured future. These haunting thoughts might drive you into depression and ruin your fair judgment. You might end up walking down the path to your financial ruin.

Relax! NULL of these disasters will happen if you plan your finances well. You can easily settle your debts and save for your future simultaneously. You just need the right strategy. We have got a few tips that can help you in this herculean task of balancing debt repayment and investing in savings, even on a tight income.

Basics and Budget

Create a basic budget for yourself. List all your financial obligations and monthly expenditure. If you have loans or outstanding debts to repay, never stall those payments. Drawing up a budget will keep you on track and you will make steady progress towards reducing your debts.

How to Save Balance and Reduce a Debt

Simultaneously, start building an emergency fund. It's like a backup plan for emergencies. Save a small amount like Rs.2,500 or Rs.3,000 every month till you have enough to support yourself for a few months in case of a financial crisis. Having saved enough for emergencies, channelize the rest of your money towards settling debts or adding to your long-term savings.

Limit Variable Expenses

Variable expenses refer to those non-essential expenses that are not mandatory for survival. I am talking about restaurant bills, movie tickets, other forms of entertainment, gifts, etc.. It might sound incredible, but if you cut down the costs of these variable expenses, you will be able to free up a considerable amount of funds for repaying debt or for savings.

Establish a monthly spending limit for yourself so that you spend reasonably and not excessively. Adhere to this limit and don't allow yourself the liberty to overspend.

Let's say you have decided that you will spend Rs.2,000 per month on variable expenses. Transfer Rs.2,000 to a particular account or card wherein you can't exceed the allotted amount. Stop all variable expenses the moment you exhaust this amount.

Follow Your Priorities

Once you have an infallible plan to take care of your basic expenses as well as control your variable expenses, strategize your finances as per your priorities. If you prefer eliminating loans and debts first, use your funds to pay them off gradually. If you feel more satisfaction in growing your savings, focus on that.

Be disciplined on your strategy and act according to your motivation. You will make steady financial progress. Remember that your strategies should be sustainable over time.


Now that you have decided how you are going to allocate your money, you must set up automatic payments. It will save you the burden of remembering each due date. Additionally, you need not make the payments manually. It will save you from a potential missed payment.

Manage the Extra Cash

You might receive extra cash from IT returns, year-end bonus, incentives, a part-time job, or as a gift. Before you spend the money on something inessential, plan ahead on how you would utilize it.

To Sum Up

If you wish to get rid of your debt quickly, you must focus on debt payoff. You will be able to save a lot of money in interest charges. On the other hand, you might want to focus on building your savings too. Or you could do both at the same time.

A well-planned financial strategy can help you save balance, reduce your debt as well as add to your savings - all at once. Make sure that you check your credit score to track your progress as well.


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