If you keep on accumulating debt, you are going to continue to dig a deeper and deeper financial hole. Eliminating debt gives you the opportunity to get your finances back on track while simultaneously improving your credit rating. It is not uncommon to have a large amount of debt from various loans, credit cards and mortgages. Instead of fixed loans, you should concentrate more on paying off revolving accounts, like credit cards.
Step 1
Pay in cash. If you don't have enough money to buy something right now, avoid purchasing it. Keep only one credit card for emergency purposes, and cut up the rest. Take the time to think about each purchase instead of impulsively buying things.
Step 2
Stick to a budget. Set a reasonable budget for daily, weekly and monthly expenses. Stick to the amount allotted for each item in order to get your spending under control.
Step 3
Call your creditors to see if you can negotiate a lower annual percentage rate (APR). Every few months, check with your credit card's customer service line to see if you are eligible for an interest rate reduction. This can free up money to make larger payments towards your balance.
Step 4
Make a list of each of your credit cards, amounts owed and current interest rate. Start paying off the creditor with the highest interest rate first. Make your payments as large as possible until the credit card is completely paid off, then move on to the card with the next highest interest rate.
Step 5
Use any funds that you have to pay off your debt. If you have a large amount of money in savings, bonds or other accounts, consider cashing out some of your assets to pay off your current debt. Once you have settled your debt, you can work towards rebuilding your savings.
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