Tackle Your Debt

The best and most effective way to eliminate debts is debt consolidation. However, you can supplement this service with the following efforts of your own.

Lose the Plastic

One of the best ways to eliminate debts is to prevent them from starting in the first place. Of course, to do this, you will have to break yourself of your reliance on credit cards. Here are some ways to help you eliminate debts by reducing your use of credit:

• Use cash. You are more likely to internalize how much you're spending when you have to fork it over in cash. Try to pay in cash wherever possible.
• Use debit over credit. If you have to use plastic, always reach for your debit card before your credit card. Debit cards deal with "real" money and don't have interest charges.
• Don't take your cards with you. To avoid temptation, leave your credit cards at home.
• Don't close unused accounts. You may think that closing an account will help you eliminate debts, but it will actually hurt your credit score.

Focus on the Balances

You will never eliminate debts unless you focus on paying down the balances, or principals, of your debts. Debt consolidation can help you pay down your balances and eliminate debts by reducing your interest rates. Here are some other things you can do:

• Determine what you owe. Go over your statements to figure out the total amount you owe, the minimum payment, and the interest rate for all of your accounts. This will help you prioritize which cards to pay off first.
• Tackle higher-interest accounts first. A smart way to eliminate debts is to pay as much as you can on your highest-interest card and make just the minimum payments on the others. Once you have that card paid off, move onto the card with the next highest rate and so on.
• Sign up for automatic payments. If you are constantly late on your payments, it will be very difficult to eliminate debts because of the interest rate increases and steep penalties that you will be assessed. Sign up for automatic minimum payments for your accounts so you don't have to worry about paying on time.