Reduce Debt Yourself

Some consumers believe that in order to reduce their debt, they must go to a professional. The truth is, anyone can pay off their debts with hard work and dedication. You have to commit to getting rid of your debt and make every effort to do so. It may take several years—depending on the size of your debt—but it will definitely be worth it.

You can do it yourself, without anyone’s help. First step is to find how much you have. Add up all loan and credit card balances that you owe. Calculate the monthly payments you make on them. Now, to pay off your debt, you must pay more than the minimum payment due. Credit card companies calculate the minimum payment based on the outstanding balance. It is usually little more than the finance charge. For example, the minimum payment on a credit card is $30. About $20 to $25 cover the finance charge. The rest is applied towards the principal balance. How long will it take to pay down $1,000 when you pay only $5 to $10 towards the balance each month? It will be at least five years. Can you afford to pay $60 or $100? Pay as much as you can to pay it off sooner.

Use an online debt reduction planner (such as CNN Money Debt Reduction Planner at to calculate how long it will take to pay your debt off based on the balance, interest rate and payment amount. You can set a debt-free deadline and work towards it.

When you make a decision to pay off your debts, remember to control your spending. Put away or cut your credit cards. Use cash when making purchases. Before buying something, think whether it is a necessity or a luxury. Save money aside for luxuries and only purchase them when you have the full amount.

Beware of the “quick fix” advertisements. They claim to be able to settle debts at 60 to 70 percent less than what you owe. However, many of these companies scam consumers out of money by charging high fees and failing to deliver what they promise. They prey on those who want a quick way out of debt. Only a little over 1 percent of debtors complete these programs. Others drop out when they realize that they are being scammed.

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