How to Reduce Debt Today

According to Kiplinger, a publisher of business finance advice, the average credit card debt alone for cardholders in their mid-20s to mid-30s exceeds $5,000. Many households are paying interest on auto loans and mortgages in addition to credit card debt. If you procrastinate in reducing your debt, you will just pay more in interest. Start today to reduce your debt and establish better habits for a secure future.

Instructions

1




Start paying cash today.

Pay cash or use your debit card for today's purchases. Stop charging. Jane Bryant Quinn, author of "Making the Most of Your Money Now," says that this simple step contains the key to debt reduction. After all, if you pay off $100 in debt today but charge another $100, your total debt stays the same. You can only reduce your debts if you stop charging.

2

Get a clear picture of your debts. List each debt including name of creditor, amount and interest rate. Plan to start by paying off the debt with the highest interest rate, Kiplinger suggests.

3

Raise money today to put on your debt. Have a yard sale, Quinn suggests, or return unused items to the store for a refund. If you have the sales slips, many stores will give you cash for items you return within a reasonable period. Deposit the cash from your sale or returns in your checking account and use it for debt reduction.

4

Transfer savings to your liquid account for debt reduction. You probably are making way less in interest than you are paying for your debts. Quinn says you should not touch your retirement accounts, however. Financial planner Ric Edelman, author of "The Truth About Money," says you should even sell other investments such as mutual funds or U.S. Savings Bonds to reduce your debt. In some cases, you will not receive your cash immediately, but you can begin the process today.

5

Use the money you have gleaned from all sources to reduce the debt with the highest interest rate. If you have enough to pay this debt off, use the balance to pay down the debt with the next highest interest rate.

6




Plan for a secure financial future.

Resolve today to continue living on a cash basis tomorrow and every day. Plan to use the surplus from your frugality to pay your debt with the highest interest rate until all your debts are paid off. Consider today just the beginning of new financial habits for a secure future without debt.