How to Reduce Debt Without Home Equity

Different debt elimination options are available to help get rid of high balances. Some homeowners choose to tap into their home's equity by means of a mortgage refinance or home equity loan to pay off debts. But what if you don't own a home? Fortunately, having equity isn't a prerequisite to debt elimination. There are several ways to get rid of or reduce your debt without using your home's equity.

Instructions

1

Make a list of your debts. Grab a sheet of paper and write down all your credit card balances and calculate your debt amount. Knowing how much you owe is key to reducing the debt.

2

Determine how much is left over after paying your monthly bills. Subtract monthly expenses from your income to determine disposable income. Monthly expenses include what you spend on rent/mortgage, insurance, food, transportation, utilities and debt payments.

3

Resolve to use your disposable income to reduce balances. Rather than use extra money on luxuries such as hair appointments, dining out and vacations, use extra income to bring down your balances.

4

Increase payments to creditors. Adding extra money to each payment makes a difference and helps you pay off balances sooner. Rather than pay $25 a month on a $1,000 credit card balance, aim to pay $100 a month in order to pay down the balance within a year.

5

Put away credit cards while paying down your balances. It's pointless to pay $100 a month on a credit card and then put new charges on the card. Stop using credit cards altogether to put a permanent dent in your balance. And if you must use the card, pay off the new charge immediately or within a month.