How to Reduce Your Debt

If you find yourself saddled with more debt than you can bear, you're not alone. The average household with credit card debt owes more than $9,000 on plastic -- and that's just the average.

Here are a few ideas to help you dig yourself out:

  • Stop borrowing. It might seem obvious, but if you're just charging a little more than you can pay here and there, those expenses add up. If you're having trouble managing your credit card spending, consider cutting up your cards and only paying for things with cash or by check. Some Fools suggest putting your cards in a bag of water and popping them in the freezer. When you're tempted to use them, you'll have to wait until they thaw, giving you time to rethink your urge.
  • Get a better rate. Consolidate your debt under a more-favorable interest rate. Depending on your circumstances, you might be able to get a bank loan to pay off your credit cards and other debt. Or, you might roll your credit card debt from various cards onto a single, more-favorable card.
  • Pay it down fast. Allocate as much money as you can to paying down your debt. You could raise some extra funds by holding a garage sale. Or you might sell your old lunch boxes, woks, books, and CDs on eBay.
  • Prioritize. If you have debts at several different interest rates, concentrate on paying down the higher-rate debt first.
  • Do a reality check. Continually remind yourself that credit cards are not mere conveniences. Accumulating charges on many credit cards is like taking out a loan with an interest rate of 12% to 35%.

If you or someone you care about is mired in credit card debt, you can learn more in our Get Out of Debt area. Saying no to junk mail offering you new credit can be difficult, but you'll find some useful tips in this article on how to stop credit card solicitation.

For more help with working through your debt problems -- as well as other issues you face in your financial life -- take a free look at our Motley Fool Green Light newsletter. Learn how you can discover the hidden fortune in your paycheck and make it work better for you.

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