DIY Debt Reducers

Reduce debt on your own with some plannng and hard work.

Reduce debt on your own with some plannng and hard work.

Tying the knot or moving in together is the beginning of an exciting new chapter in life. Along with your own relationship, career and home often comes your own debt. Many young couples struggle to establish new lives under the burden of credit card, student loan and other debt. Follow these tips to reduce the debt you have now and avoid getting more. Start by gathering all of your financial information and get ready to make a plan to start off strong on your new life together.

Make a Budget

Make a budget to identify your income and expenses. If you bring home less than you spend, you have to increase monthly income and decrease monthly expenses. Begin by listing all of your fixed expenses (items that have the same payments every month) including all outstanding debt with amounts owing and interest rates. List student loans and mortgage separately, because these debts can reduce personal taxes and may be eligible for separate government repayment relief programs. Then list all other expenses and all sources of income.

Consolidate Debt

Order the other debt including credit cards, loans, and lines of credit from the highest interest rate to the lowest. Credit cards and lines of credit are considered revolving credit because you can easily add to their balances. Identify the revolving credit account with the lowest interest rate. If there is available room, transfer or consolidate higher interest balances onto this credit card or line of credit. Be careful about using a home equity line of credit because this reduces the amount of equity you have in your home, and if you default on it the lenders can seize your house.

Negotiate Lower Rates

Always try to get the lowest interest rate possible. Call your credit card company or financial institution and ask to renegotiate the interest rate on your account. They are more likely to do this if you have a good credit score and have made payments on time, and if you are prepared to transfer higher interest rate debt to them. Ask about transfer fees or other costs, and immediately close the higher interest rate credit card once the balance has been transferred.

Organize Repayment Schedule

Set up your debt repayment plan to make at least the minimum payment to each account, with extra funds allocated to the highest rate account every month. Once that account is paid off, close it, and begin applying the payment you were making to it to the account with the next highest interest rate. If you continue to use credit cards, pay off the month's purchases in addition to the debt repayment amount. Avoid debt relief services or debt settlement companies if possible -- they can incorporate high fees into a debt repayment plan, and you can do it yourselves for free.

About the Author

A former financial adviser with more than a decade of experience in personal finance and small business banking, Sarita Harbour is a professional writer specializing in personal finance, small business, technology, and content marketing techniques. Her writing appears online at sites such as Yahoo! Homes and Bob Vila. Harbour holds a bachelor's degree in psychology and computer science from the University of Guelph and the Personal Financial Planning designation from the Institute of Canadian Bankers.

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