The Best Ways to Reduce or Eliminate Debt

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Debt is something that nearly every adult deals with. We can choose to allow our debt to control us, or we can take steps to control our debt. Most high interest rate debt is credit card debt, so it makes sense to focus on that debt first.

Pay the High Interest Credit Cards First

  • Interest rates add to our debt every day. The higher the interest rate, the more it adds to our overall debt. A good way to get your debt under control is to start eliminating the high interest rate credit cards that you have by paying extra to them until they are paid off. Start with the credit card that has the highest interest rate, and pay extra to it each month until the balance is gone. If you have credit cards with the same interest rate, then start with the accounts that have the lowest balance first. The more high interest accounts you can get rid of, the lower your debt will go. Once the high interest credit card is paid off, cut it up and write a letter to the company asking them to close your account.

Make a List and Read it Daily

  • Debt is easier to work on if you can see it all listed together on one sheet of paper. Create a list of all of the installment accounts you have, minus your utilities, and then focus on paying them off. Include the name of the creditor, the kind of account it is, the interest rate you are paying, the monthly minimum payment, and the remaining balance. When you can see your debt listed together, you can formulate a plan to help pay it off.

Cut Up Your Credit Cards

  • The easiest way to stop the financial damage your credit cards are doing, and get your debt under control, is to cut your credit cards up. After the credit cards are cut up, you can then work on a plan to start paying the balances off. The temptation to use your credit cards while you are still trying to pay them off is what can derail any attempts you are making to get your debt under control. With the cards gone so is the temptation.

Reduce Spending

  • It sounds simple to say that you can help reduce your debt by spending less, but reducing your spending can be a difficult habit to get into. Start off with simple things that you may not even notice but can save you money. Lower the temperature on your furnace by just a couple of degrees. Replace the standard light bulbs that you use the most with energy efficient florescent bulbs. If you currently do your laundry at home with your own washer and dryer, consider replacing one of your home laundry days with a trip to the laundromat. Drive the speed limit to conserve on gas. Carry snacks around with you to prevent yourself from stopping to buy food when you are hungry. Use these little money saving tips to start lowering your monthly debt. Use the extra money you are saving to apply towards your installment accounts to begin paying them off.

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