Debt can be scary, and getting rid of debt can feel overwhelming. In general, experts recommend that your debt, excluding your home, should not exceed 20% of your take-home pay. This is called your debt-to-income ratio, or DTI. To calculate your own debt-to-income ratio, first add all your monthly debts including rent or mortgage payments, student and auto loan payments, minimum credit card payments, and any other debts you might have. Next, divide that by your gross monthly income, which is your income before taxes. That formula will give you your DTI ratio in the form of a percentage.

DEBT EXPENSES ÷ PRE-TAX INCOME = DEBT-TO-INCOME RATIO

Bringing down your debt-to-income ratio can be challenging, but there are a few small things you can do to start paying down that debt.

1. Limit your meals out. It’s easier than ever to avoid cooking, with so many dine-out or order-out options. However, making meals at home can save you hundreds or thousands of dollars a year that could then be put towards paying off debt.

2. Get rid of that cable subscription. “Cord cutting” is becoming increasingly popular as streaming services offer a wide variety of shows and movies on demand. Get rid of cable and opt for a cheaper online streaming service.

3. Utilize your local library. Libraries are an amazing resource for free entertainment! From books to DVDs, kid’s crafts, story time, and other activities, your library may offer endless hours of free entertainment.

4. Order your groceries online. Make a list, stick to it, and order your groceries online to help prevent impulse buys. Stores such as Walmart offer free grocery pick-up services that can help you save time and money.

5. Get rid of your credit cards. Use cash or a debit card for all regular day-to-day expenses in order to stop adding to your debt.

With some creative budgeting, you could start to see your debt decreasing dramatically. When you’re able to start paying off your debt in increasing amounts, that debt may start to feel a little less scary.

Want to talk to a financial advisor about your debt? As a member of Goldenwest, you can take advantage of the GreenPath program, which includes free financial education and couseling. They are a non-profit financial wellness organization dedicated to helping you lead a financially healthy life. Visit our GreenPath page to learn more.