Ten steps that can lead to debt reduction

Debt reduction requires good planning and great financial discipline. Here are ten steps that can reduce your debt: 1. Home Equity Loan: If you own a home, you are in a very good position to clear all your debts. You can get a home equity loan, line of credit, or a refinance on your existing mortgage. All three methods will raise the necessary funds to make you debt-free. The danger is that if you default on the loan you may end yup losing your house.

2. Replace high interest credit cards: Scout the market to locate the credit card company that offers lowest interest rates. Transfer your card balance to this company. This will reduce your interest repayments substantially. You should also look out for balance transfers at 0% interest. But remember that this gets negated if you skip or delay payment. One miss and you are back to paying the usual interest! 3. Sell assets: Do you have assets that you can dispose off like an extra car, antiques, jewelry, extra property? If yes, put them up for sale either on eBay or at a local yard. Then use the money you make to start paying your debts. Always begin with the biggest debt first, they are the ones that are the most difficult.

4. Get a personal debt consolidation loan: If you have a good credit score and reasonable income you should have little trouble in getting a debt consolidation loan through your bank or credit union. Credit unions offer lower interest while banks have their own individual lending criteria. Sometimes you may even have to put up collateral for such a loan.

5. Low Mortgage refinancing: Even if you do not possess property, check if you qualify for a low or moderate income loan. What you save through reduced mortgage payments can help you pay off your debts.

6. Curb spending instincts: Stop spending on things you do not need. Most important, do not use your credit cards to make impulse purchases. Practice restraint and you could be on your way to a better life!

7. Use your "extra" money: Whenever you receive "extra" money (refund, gift or any unexpected gain) use it to pay off a credit card bill or some other debt.

8. Use low interest savings funds: If you have an account that pays you a low interest rate, you can use it to clear a debt. What you save on your debt interest is probably much more than what you would have gained from that amount.

9. Find an extra source of income: Find a second job that earns you a bit more without eating into your time. Every little bit that goes into paying off your debts can make a huge difference.

10. Use a debit card: This way you can spend only as much as you have.