Tips For Reducing Your Debt 

If you are looking for ways to reduce your debt you will find all kinds of advice available.  In fact, there is so much information on ways to reduce debt that you may find it all confusing.  There are programs which say they are designed to help you get debt free.  Actually, these types of programs are designed to keep you in debt longer.   

Getting into debt did not happen overnight.  Getting out of debt is not going to happen overnight either.  The first thing you need to do is make a list of your outstanding debts and the balances due as well as the interest rates.  Then consider the amount of income you have coming into the home each month.  Make another list of all your monthly expenses such as rent or mortgage, utilities and food, etc.  To this figure add the amount of your monthly credit card payments.  If you are lucky you will have at least as much coming in as should be going out.  If there is a short fall, then you need to find a way to cut back on your discretionary spending.  Cut back of things like shopping, eating out, buying cigarettes and/or alcohol, taking vacations, etc. 

Now you need a plan to attack your debt.  Each credit card bill has an amount you can pay if you want to pay off that card in three years.  Decide which account you want to pay off first.  Some people choose to pay off the card with the lowest balance first while others prefer to pay off the card with the highest interest rate first.  Pay exactly the same amount on this card every month although the credit card bill will show a lower payment due.  Once the first card is paid off add the money you paid on this card to the payment for the next card you want to pay off.  Continue doing this until all your cards are clear.  It should go without saying that while you are paying down your credit cards you are not using them at all. 

If is a good idea to put some money away each month in an emergency fund so when unexpected expenses happen, you will have the money and will not have to use a charge card. 

Another way to reduce debt is debt consolidation.  With this method you combine all your debt into one large debt and then have just one bill to pay off and the rate may be lower.  There is a huge downside to this method unless you are very self-disciplined.  Many people consolidate their debts only to go out and run up the credit card bills again.  Now they are responsible for paying back the consolidated loan in addition to credit card bills. 

If some of your credit cards have high interest rates you might want to consider balance transfers.  With this method you transfer the balance from the high interest card to one with a lower interest rate.  Be sure to read all the small print.  Sometimes these are introductory offers or limited time offers and the low rate will expire after a period of time.  This does not mean this method is not good.  It just means that you need to be careful and aware of the terms of the balance transfer. 

If you are not able to handle debt reduction on your own you should consult with a reputable credit counseling agency.  With these agencies you pay them a single payment each month and they handle the payments to your creditors.  They typically will negotiate with each of your creditors to obtain better repayment terms for you.  Do your research and be sure you are dealing with a reputable credit counseling agency.  There are some companies that do not have your best interests at heart and are only in business to make money for themselves. 

Reducing your debt is not going to be quick and it is not going to be easy.  However, you will have a much better way of life once you are free of a heavy load of debt.