How to Reduce Debt With Creditors

With the economy in the state that it is in, many individuals have run up thousands, if not tens of thousands, of dollars in credit card debt. A solid plan and discipline are needed, along with an acceptance of how you got into debt in the first place. Once you have these things in place, you can begin the work of reducing your debt.

Instructions

How to Reduce Debt

1

First and foremost, you need to find out what got you into debt. Download your credit card and loan statements into your budgeting software program. If you do not have budgeting software, look through your checking account statements and list all of your expenses into categories. Next, look at your credit card and loan statements and list all of your debts on another sheet of paper.

2

Look at your expenses and see if there is any way to reduce the spending in any area. Can you reduce subscription services like the gym, cable, magazine subscriptions or the Internet? Are you spending too much on one area, like eating out or shopping for clothes? Make a solid budget based upon lessened spending in those areas.

3

Call each and every credit card, loan company and subscription service that you have. See if any of the subscription services are willing to reduce your monthly fees to a promotional rate to keep your business. In addition, call each credit card and loan company and ask for an interest rate reduction.

4

Re-adjust your budget to reflect the lower monthly payments on the subscription services. Now, take the extra money that you have saved with your streamlined budget and lower monthly payments and put it towards extra payments on one monthly debt. Picking the smallest debt will give you the quickest reward for all of your hard work.

5

Pay the additional amount each month on the smallest debt until the debt is paid in full. Now, snowball the payment to the next debt. Take the amount you were spending on paying the first debt and add it to the second debt's payment. Before you know it, you will have paid that one off as well. Now, snowball all of that payment to the next debt, and so on until you are debt free.