If you want to rapidly reduce your debt, the best thing you can do is make extra payments, as often as possible, to your creditors.  But, there are some other things you can do - things that are free or inexpensive - that can help.

1.  Make credit card payments as soon as possible.  Most credit cards charge interest based on your average daily balance.  The sooner you make a payment, the lower your average daily balance will be, and this helps to reduce the amount of interest you have to pay.  (The exact formula for interest calculation varies from card issuer to card issuer.  Contact your credit card issuer and ask them how they calculate your interest.)

2.  Call creditors and ask them to reduce interest rates.  Credit card companies want your business.  Simply call your credit card company and ask for a reduced rate. Obviously, they might say no… but they might say yes!  You’ll never know until you call.

3.  Transfer balances (carefully).  I hesitate to mention this one, but a balance transfer, if done correctly, can help to reduce your interest rates.  But, you must avoid a few pitfalls.  First, be sure that you understand the fees associated with the transfer.  Second, be sure that you aren’t just “moving money around“.  If you think you are ready to take the plunge, you might want to check out this list over at Five Cent Nickel (one of my favorite personal finance blogs) of credit card companies that are offering zero-percent interest on balance transfers.  Be aware, most credit card companies charge a balance transfer fee.  Be sure that you run the numbers before you make the transfer.  Don’t pay the fee unless you will see a significant, long term reduction in rates.  And, be sure that you can pay off the balance before the low, introductory period expires.

4.  Sell your stuff and use the proceeds for debt reduction.  I’ll admit, this one requires a little more work than the previous three.  But, it works!  Do you have “stuff” - clothes that no longer fit, electronics you no longer use, books you’ll never read?  Instead of storing it, why don’t you spend a few hours going through your stuff and making a plan for selling some of it?  Personally, I like to sell baby clothes on eBay and we also have an annual garage sale.  Getting rid of clutter feels awesome - and the proceeds can go towards your debt reduction!  (eBay charges a small fee to list your items.)

5.  Have a plan.  It happens over and over.  You get excited about reducing your debt.  You promise yourself that you are going to put the credit cards away, pay off your balances, and get serious about getting out of debt!  But, inevitably, after a few months? weeks? days? you fall off the wagon, get discouraged, and fail to make progress.  What’s the problem?  What happened?  Debt reduction requires three things - determination, money, and, a plan!  So, sit down tonight and create a plan for reducing your debt.  May I suggest the No Credit Needed Debt Reduction Guide?  (Also available as a free E-Book.)

When it comes to getting out of debt, there are no shortcuts.  But, if you work hard, focus, and use some of the ideas listed above, you can do it!

If you have tips of your own, I’d love to read them.  Leave a comment and share!

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