Five Ways to Tackle Debt

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Posted on 06/11/2008

For some, climbing Mount Everest may seem like an easier mountain to tackle than getting rid of your pile of debt. But with a lot of discipline and focus it can happen. Here are five ways to tackle debt.

1. Start spending less than you make. This may sound like a no-brainer, but this is not a way of life for many Americans. Sit down, make a budget and stick to it. Check out this article on The Bargainist for tips. Once you start spending less than you make you won't be making that mountain any bigger.

2. Try plastic surgery. No, we're not talking about nose jobs or lipo. This is about those credit cards. Sure they're cute and convenient, but they might be the gateway to more debt. Cut 'em up.

3. Pay more than the minimum. CNN Money has a really cool debt calculator. Plug in your balance, interest rate and when you'd like to have the debt wiped out. Then they'll tell you how much your payments need to be to make that happen. This is a great way to find out when you'll conquer your debt mountain.

4. Focus, focus, focus. There's a widely followed debt-reduction strategy that says debts should be paid off smallest to largest. Write all of your debt down on paper in order of the balance that is due. Start putting as much money as possible on the smallest debt until it's gone, while continuing to pay the minimum on the rest. Once the smallest debt is paid off, move up to the next one on the list. The thought is that focus and intensity will take care of debts faster than trying to work on them all at once.

5. Lower your rates. It probably sounds about as fun as jumping up and down for an hour, but calling your credit card companies really can help. Ask for a lower rate. Check out Cardtrak.com for a long list of credit cards offering 0% on balance transfers. If your debt isn't earning interest, chances are it will be paid off in a lot less time.

By Alison Storm

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