Top Apps and Tools to Reduce Debt in 2023

Navigating the world of debt can be daunting. But with the right tools at your fingertips, you can take control of your financial future. The most important step in reducing debt is understanding it. 

In the age of smartphones and digital tools, managing your debt has become significantly easier than in the past. Numerous apps, websites, and tools available today can help you understand your debt and, more importantly, provide actionable strategies to lower it. 

Just like any journey, the path to financial freedom begins with a single step. Why not take that step today?

1. Payoff Planner

Payoff Planner is a simple yet powerful app designed to help you prioritize your debts and create a repayment plan. You input all sources of your debts, including credit cards, loans, and mortgages, along with the balances, interest rates, and minimum payments. 

The app calculates how long it will take to pay off each debt and in what order you should do so to minimize your interest payments. The interface is easy to navigate, and you’ll get a clear view of your total debt and payoff timeline. The best part? It’s free!

2. Tally

Next on the list is Tally. Tally is a credit card management app that helps users save money by automating their payments to avoid late fees and reduce credit card debt. 

To do this, Tally provides a line of credit with a lower interest rate to manage payments on your behalf. It ensures you always pay on time and pays off your higher-interest cards first. 

The cost for Tally varies, as it depends on your Tally credit line’s APR. However, considering the potential savings on interest and late fees, it might be worth a shot. You’ll need a minimum credit score of 660 to use Tally.

3. Undebt.it

Undebt.it is a versatile web-based tool that helps you design a custom debt repayment plan. The platform uses popular debt reduction strategies like the ‘Debt Snowball’ and the ‘Debt Avalanche’ methods. 

• The Debt Snowball method focuses on paying off the smallest debts first to build momentum. 
• The Debt Avalanche method prioritizes paying off debts with the highest interest rate first to minimize interest paid over time. 

It’s free to use the basic features of Undebt.it, but for $12/year, you can upgrade to Undebt.it+ for access to additional features like payment reminders and more detailed reports.

4. Qapital

Qapital is an all-in-one finance app that combines automated savings, investment, and budgeting. Qapital’s main feature is its rules-based savings system, which triggers transfers to your Qapital account based on the “rules” you set up (like rounding up to the nearest dollar on every purchase and moving the difference to savings). It can be a great way to save money passively and reduce debt over time. 

Qapital’s full suite of features comes at a cost, with plans starting at $3/month. However, considering its comprehensive approach to personal finance, it could be a wise investment for those serious about tackling their debt.

Creating a Budget

The first step in reducing your debt is coming up with a budget, which serves as a financial roadmap. To start, list all your income sources and all your expenses. Be sure to include everything, from rent or mortgage payments to that morning coffee you pick up on your way to work.

A 2019 survey from the Certified Financial Planner Board found that nearly 60% of Americans track their spending against a budget. This isn’t surprising when you consider that budgeting can increase your chances of having enough money to cover your bills and savings goals.

There are plenty of free online tools and apps like Mint and You Need A Budget (YNAB) that can make this process easier and more automated. Remember, the goal of a budget isn’t to restrict your spending but to give you control over your money and ensure you’re using it in a way that aligns with your goals.

Increasing Your Income

If you’re finding it tough to meet your financial obligations with your current income, it may be time to explore ways to increase your earnings. This could involve asking for a raise, looking for a better-paying job, or even starting a side hustle.

According to a Bankrate survey, nearly 45% of U.S. workers have a side job, earning an average of $1,122 per month from it. That’s a significant boost that can make a big difference in paying off debt or building savings.

Reducing Your Spending

While boosting income is one side of the equation, reducing spending is the other. Review your budget and identify areas where you can cut back. These might include dining out, rarely-used subscriptions, or even big-ticket items like housing or car payments.

The Bureau of Labor Statistics reports that the average American spent $3,030 dining out in 2021 – a 27.6% increase from the previous year. Imagine how much you could save by cooking at home more often. Remember, even small changes can add up over time.

Avoiding Credit Card Debt

Credit cards can be a valuable financial tool, but it can be easy to fall into the trap of overspending. Try to use credit cards strategically and pay off the balance in full each month to avoid interest charges. 

By avoiding carrying a balance on your credit cards, you can save a significant amount in interest charges. If you’re already dealing with credit card debt, consider strategies like debt avalanche (paying off the highest interest rate first) or debt snowball (paying off the smallest debts first to build momentum).