What is the Best Way to Lower Debt?

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Unfortunately, in these days of high unemployment and rising prices, most of us have debts of one sort or another.  The best way to lower debt depends on the type of debt you have but most people have one or all of a mortgage, loan agreement for a car or other high value item and credit cards.  Here are some ideas to help you with paying off debt fast.

1.    Check out what interest rate you're paying on your debt and shop around to see if you can better it.  For a mortgage or other loan agreement, you need to make your self aware of any penalties you will incur by terminating your agreement early and any further costs you may incur by going with a new lender.  If the savings outweigh the costs, make the change and don't delay.

2.    The best way to lower debt if you have several credit cards find out which one has the lowest interest rate and whether they will accept a transfer of debts from your other cards.  Consolidate all your debts on the one card and tear up the others.  Alternatively, find another credit card which has a low rate and will accept transferred debts.  Many cards offer zero percent interest for the first six months on transferred debt.  When the zero interest rate expires, find another card which does the same.  Continue to do this while paying off as much as you can.

3.    Pay more than the minimum amount on whichever type of debt, even if you can't manage much more.

4.    Rein in your spending.  If you have heavy debts then you really don't need that fancy pair of shoes.  Cut out the junk food, the unnecessary snacks and coffees, all of which cost money that you can't afford.  Never shop for food when you're hungry or without a list.

5.    Don't bother with trying to put money aside until your debt is paid off; you'll never receive more interest on savings than you're having to pay out on your debt, unless you have that zero percent credit card.  In which case, pay the minimum monthly to the card, put the excess in a savings account to earn some interest then use the savings at the end of the zero percent period to pay off part of the credit card debt.  Keep careful records of dates and amounts if you're going to do this or you will end up with even more debt when the free period ends.

In the end, the best way to lower debt is the one that suits you and that you can manage long term but follow some of these tips and you'll soon be paying off debt fast.
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