Most households incur large amounts of debt before the homeowners even realize how far deep in debt they even are. Paying minimum payments on credit cards or using them to pay household expenses is common. But debt can effectively be reduced--even eliminated entirely--with a bit of planning and some determination to do so. Below are four ways to reduce and eliminate debt as soon as possible.
Accountability
Be accountable for daily, weekly and monthly expenditures. Make a budget and take note of where deviations from the budget are made on a regular basis. Cut back on unnecessary trips to the store, purchases that are non-essential and household expenses such as cable television that may be eliminated to save money that can be used to pay down debt.
Sell Items
Sell an extra car, boat, motorcycle or other large item to help pay off debt. Have a yard sale and sell unwanted or unneeded household items. Use the money from the sale of these items to implement the snowball technique as described below.
Move Credit Cards
Move higher-balance credit cards to credit cards with lower interest rates to save on the amount of interest paid over time. Check the agreement for the new card to make sure that the low interest rate isn't only in effect for a short time and then will revert to a higher interest rate than what you currently pay when the introductory time period is up.
Snowball Effect
Pay the credit card with the smallest amount off first. Use the payment that used to be reserved for this card to pay on the next lowest card until that one is paid off. Continue working up the list of credit cards until each one is paid off completely.
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