How to Shrink Debt

Shrinking debt takes careful planning and adherence to a strategy. Benefits to paying off debt include quicker credit approvals, lower interest rates on loans and a higher credit rating. Debt accumulates from excess spending with credit cards or from taking out too many installment loans. Keeping debt to a minimum and paying off existing balances can improve your personal finances and increase your personal savings.

Instructions

1

Pay for merchandise with your available cash. Break the habit of using credit cards to pay for items. Bring cash only when shopping, and if you don't have cash, postpone a purchase until you save the money.

2

Make higher payments on your outstanding debts. Get away from minimum payments and begin forwarding double or triple payments to your credit card companies and other creditors to shrink your debt.

3

Discuss lower interest rates to reduce the principal faster. Approach your creditors and ask them to lower your present interest rate on your credit card accounts. This method works if you have a good payment history and credit score. A lower rate helps shrink debt faster because you accumulate less interest each month.

4

Reduce spending to get rid of debt. Cut back and reduce expenditures to create additional disposable income each month. Use this extra money to reduce balances on your credit cards and other loans.

5

Boost earnings to dissolve debt sooner. Add a part-time job to your schedule or ask your boss for a raise or overtime to help pay down your outstanding balances. Earn an extra $75 a week and you'll have an additional $300 a month to pay toward your debts.