How to Reduce Monthly Expenses to Pay Off Debt
- Cutting back on spending is essential when you’re trying to pay off debt.
- There are certain expenses in your budget that you can’t cut without upending your life, such as housing costs.
- Identify expenses you could reduce or eliminate without too much difficulty, like eating out or buying new clothing.
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“Right away, I had more money each month because of program costs so much less than what I was paying on my minimums.”
If you’re carrying debt, you may be eager to pay it off as quickly as possible (and avoid the need for debt relief). That’s going to take one specific thing—money.
You’ll often hear that to pay off debt, you need to be prepared to cut your spending. But there are only so many expenses in your budget you can reasonably reduce.
For example, you need a place to live. While downsizing from a two-bedroom apartment to a one-bedroom could save you money, it might also mean sharing a room with your spouse and two young children. That’s the sort of change that could have a very negative impact on your quality of life.
On the other hand, there may be expenses you could cut that don’t have quite the same negative impact. This isn’t to say that cutting them will be easy, just that they might not cause the same amount of upheaval. Here are five reasonable expenses to look at cutting so you can free up more money to pay off debt.
1. Subscriptions and Memberships
You may be someone who pays for Netflix every month, and whose credit card has a monthly gym charge. But if you only turn on Netflix every so often, and your gym attendance is spotty at best, then it may be time to cancel those services and free up the money to tackle your debt.
Even if you are using your subscriptions and memberships often, you may not need all of them all the time. If you're eager to pay off debt, canceling one or two services temporarily could help you make better progress against your debt.
2. Restaurant Meals
Even if you enjoy cooking, it's not always easy to find the time to shop for food and plan meals.
It’s easy to rely on having dinner out or grabbing some quick takeout on the way home from work. But chances are, the amount you're spending on a single restaurant meal could cover several meals at home.
If you're trying to pay off debt, try skipping restaurant meals for a few months or limiting yourself to no more than one or two per month. Doing so could help you make a big dent in your loan or credit card balances.
Plus, by cutting out restaurant meals, you might discover new recipes you really love.
3. Your Car (if Other Options are Available)
Between auto loan payments, insurance, maintenance, and gas, it costs a lot of money to own a car. In fact, AAA puts the average monthly cost of a new car at $1,024.71.
Your costs may be lower if you have a used car. But you're still spending money to own your car. If there's public transportation where you live, taking the bus or train instead of driving could result in big savings. That's money you could use to pay off your debt.
Don’t be down on yourself if living without a car isn’t an option for you. In that case, review your situation to figure out whether you could lower your transportation costs another way. For example, if you have a car loan, could you sell your car, pay off the loan, and buy something cheaper with the money that’s left? If you shuttle your kids around, could you start trading off driving responsibilities with another parent?
4. Clothing
Even if you need to dress professionally to work, there are ways to reduce your spending on clothes. For example, many people get by with a few pairs of pants (or skirts) and a slightly larger selection of tops. Keep what you have for at least a few seasons.
If you're trying to pay off debt, one expense you can cut more easily for the time being is clothing you don't need for work.
It's fun to buy new loungewear or upgrade your weekend wardrobe from time to time. But while you’re in debt payoff mode, reserve your money to pay off debt instead—especially if you're trying to get out of debt as quickly as possible.
5. Coffee Shop Coffee
If you’re a coffee drinker, it’s non-negotiable. We get it. But cutting out barista-made coffee is a different story.
Make your own coffee at home. A cup of coffee you can make at home for $0.50 might cost you $3.50 or more at a local coffee shop. That may not seem like a huge difference at first—it’s only $3!
But when you multiply $3 by 20 workdays per month, that’s $60. And over the course of 12 months, that’s $720. That could pay off a nice chunk of your debt.
Budget Cuts for Debt Payoff Don’t Have to Be Forever
Cutting expenses isn’t easy. These ideas are meant to inspire you to look for things you can live without—at least for a time—while you direct your dollars to something that’s far more important to you: Becoming debt-free.
Remember, none of these expenses have to be cut on a permanent basis. What you’re doing is choosing to use your money for what’s most important to you right now. Your priorities can and will change throughout your life. Once you’re debt-free, you can sign up for Netflix again, start dining out more often, and buy all of the cozy pants your heart desires.
If you feel you’re still overwhelmed by debt, you shouldn’t hesitate to explore your options for debt relief. You may be eligible to settle your debt for less than what you owe. Debt consolidation could also be an option that helps you pay off debt more easily and affordably. Get a free debt evaluation and an expert’s opinion.
A look into the world of debt relief seekers
We looked at a sample of data from Freedom Debt Relief of people seeking the best debt relief company for them during October 2026. This data highlights the wide range of individuals turning to debt relief.
FICO scores and enrolled debt
In October 2026, the average FICO score for people enrolling in a debt settlement program was 595, with an average enrolled debt of $27,336. For different age groups, the FICO scores varied. For instance, those aged 51-65 had an average FICO score of 589 and an enrolled debt of $29,185. The 18-25 age group had an average FICO score of 570 and an enrolled debt of $15,865.
No matter your age or debt level, it's reassuring to know you're not alone. Taking the step to seek help can lead you towards a brighter financial future.
Personal loan balances – average debt by selected states
Personal loans are one type of installment loans. Generally you borrow at a fixed rate with a fixed monthly payment.
In October 2026, 44% of the debt relief seekers had a personal loan. The average personal loan was $10,718, and the average monthly payment was $362.
Here's a quick look at the top five states by average personal loan balance.
Personal loans - by states
| State | % with personal loan | Avg personal loan balance | Average personal loan original amount | Avg personal loan monthly payment |
|---|---|---|---|---|
| Massachusetts | 42% | $14,653 | $21,431 | $474 |
| Connecticut | 44% | $13,546 | $21,163 | $475 |
| New York | 37% | $13,499 | $20,464 | $447 |
| New Hampshire | 49% | $13,206 | $18,625 | $410 |
| Minnesota | 44% | $12,944 | $18,836 | $470 |
Personal loans are an important financial tool. You can use them for debt consolidation. You can also use them to make large purchases, do home improvements, or for other purposes.
Manage Your Finances Better
Understanding your debt situation is crucial. It could be high credit use, many tradelines, or a low FICO score. The right debt relief can help you manage your money. Begin your journey to financial stability by taking the first step.
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Author Information
Written by
Maurie Backman
Maurie Backman is a personal finance writer with over 10 years of experience. Her coverage areas include retirement, investing, real estate, and credit and debt management.
Reviewed by
Kimberly Rotter
Kimberly Rotter is a financial counselor and consumer credit expert who helps people with average or low incomes discover how to create wealth and opportunities. She’s a veteran writer and editor who has spent more than 30 years creating thousands of hours of educational content in every possible format.
Frequently Asked Questions
How long does it take to pay off debt?
If you attack your debts aggressively (not including the mortgage) it's possible to pay them off in two to five years. If you are paying an installment loan as agreed, the payoff time depends on the loan's term. A 30-year mortgage takes 30 years to pay off unless you make extra payments.
How can debt consolidation help you pay off debt faster?
You can use a debt consolidation loan to pay off debt faster by choosing one with a lower interest rate. A lower rate allows more of your payment to go toward reducing your principal.
Suppose that you owe $5,000 in credit card accounts at a 17% interest rate and your total minimum payment is $100. It would take 88 months (7.3 years) to pay off the debt and cost $3,759 in interest. By refinancing it with an 8% 15-year home equity loan, your payment would drop to $48 per month. But you'd be paying for 15 years and your total interest would still be $3,601. What if you continued to pay $100 per month after consolidating? You'd clear your debt in 61 months (five years) and your total interest expense would drop to just $1,101!
What’s the fastest way to pay off debt?
If you want to know how to pay off debt fast, you might ask a debt consolidation lender, a credit counselor, a debt consultant, or a bankruptcy attorney. Here are the timeframes for each option:
Debt consolidation does not pay off your debt. But by replacing high-interest debt with low-interest debt, you may clear your balances faster. Pick the debt consolidation loan with the lowest interest rate, then choose the shortest term you can afford.
Debt management from a credit counseling company typically takes four years. Note that debt management plans do not reduce what you owe. Debt management can fail when participants can’t afford the monthly payment over several years.
Debt settlement: According to the Association for Consumer Debt Relief (ACDR), “Clients generally see initial account settlements within 4-6 months.” It typically takes two to four years to graduate from a debt settlement program.
Chapter 13 bankruptcies take three to five years to complete, but most filers have to make payments for five years.
You may be able to get debt-free with a Chapter 7 bankruptcy in four to six months after filing.