We often speak of the importance of paying off debt as a means to financial freedom, but what is equally, if not more important, is a discussion of ways to pay off that debt.  We’ve compiled some helpful hints on how to pay off your personal debt (whether it be credit card, student or other types of debt).  With a little smart shopping, saving sense, and the willingness to seek help, anyone can get themselves out of debt without having to go the dreaded bankruptcy route.

Talk to your credit lender. They may be willing to cut you some slack if you explain to them that you plan on paying off all the debt.  Ask for a reduced payment schedule.  The key is to ensure them (in not so many words) not to give the debt over to a collection agency.  If you can talk to them and ensure them that the debt will be paid off, then you may convince them that getting the full amount of money you owe is preferably to hiking up your interest rate and never getting most of it.

Make sure you pay off high interest rate debt first.  This always has to be your first priority.  Even if there is more money in that debt, or less, or whatever reason you may not prioritize it, ignore that reason.  That money is more likely to increase substantially and further hamper your ability to get out of debt.

Cut expenses!  Cut expenses!  Cut expenses! Every dollar you waste on an unnecessary purchase is potentially several dollars that you owe in debt.  Make sure you prioritize getting out of debt first, then spending latter.  Those expenses will even feel better once you know you can make them without worrying about your debt.  There are plenty of ways to do this too.  You can cut more coupons, buy generics instead of brand name products, you can watch less tv, make your own lunch and brew your own coffee.  Each of these will cut expenses easily.

Refinance your debt.  All the time people are told to refinance their mortgage as a means of lowering debt.  Why not do it for other forms of debt as well.  If you can get your hands on a lower interest credit card, switch your debt from one source to a cheaper one.  Don’t make a habit of paying off credit cards with other credit cards, but finding lower interest solutions to your credit and debt problems is a good solution.

Make larger payments towards paying off debt.  This is sort of the culmination of the rest of the tips, but it is important to say.  Paying the minimum is often only a single digit percentage of what you owe.  Your interest on your original debt could easily get higher than the original debt if you keep this up.  Along with this, you may want to consider withdrawing some of your money that is invested or in savings.  Think about your returns on a savings account:  4%?  5%.  What is your interest rate on a credit card?  Most likely much much much higher than that.  Don’t get rid of an emergency fund, but consider taking money that is earning very little compared to what you are losing in interest.

Think of all these measures to get rid of debt as a way of making 15-20% more income each year, without it being taxed.  That’s a hard prospect to scoff at isn’t it?  Keep that goal in mind, and you will be able to do what is necessary to get rid of your debt

How do you save money?  What have you done to reduce debt?  As always, your comments are welcome

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