How to Reduce Consumer Debt

Consumer debt from credit cards, installment loans and other types of financing can take a large percentage of your income each month. And if you owe a considerable sum on credit cards, the consequences can result in a lower credit rating. It isn't always easy to pay down or reduce consumer debt. High interest rates and insufficient income can lead to lingering debt. But there are ways to deal with consumer debt.

Instructions

1

Pay for items with cash. Ban credit cards from your wallet and get into a routine of only carrying cash. Freeze credit cards or physically destroy the cards to alleviate any temptation.

2

Reduce credit card debt by paying more than your minimum. Start small and begin doubling or tripling your minimum payments to bring down the balance. Make higher payments as your income increases, or use funds from employment bonuses or tax returns to get rid of consumer debt.

3

Tap into your personal savings. Good money management involves never touching your personal savings account. But if dealing with high consumer debt and interest rates, consider using cash from savings to reduce debt.

4

Request an interest rate reduction. Getting a better rate on debt reduces your payments. Call your creditors and ask them to lower your rate. They'll evaluate your credit first to see if you're eligible for a better rate. If approved, continue to make higher payments. This way, a larger percentage of your monthly payment goes toward reducing your principal.

5

Make personal sacrifices. Evaluate your monthly spending habits and cut back in certain areas. Review receipts and credit card statements and assess how much money you spend on dining out, entertainment and needless shopping. Resolve to stop unnecessary spending and use the extra money to pay down your debts.

6

Look for ways to increase your monthly income. If you simply cannot pay down your consumer debt with your present income, look into other employment opportunities or apply for a part-time job to generate additional income. Earning an extra $500 monthly can pay off a $3,000 credit card in six months.