How do I Pay Down Debt Without Credit Counseling?

There are a number of effective debt elimination strategies.
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If you're drowning in debt, you may have considered enlisting the services of a credit counseling agency to help you get your finances under control. While credit counseling may be a more palatable alternative to filing for bankruptcy, you'll likely have to pay a fee, and it could have a negative impact on your ability to obtain future credit. Fortunately, there are some strategies available to help you eliminate debt without credit counseling.

Track Spending

To free up money to apply to debt reduction, take a hard look at your spending habits. By keeping a log of how you spend every penny for one month, you can identify things you waste money on, such as gourmet coffee or extravagant lunches. By making lower-priced substitutions or eliminating the expenditures altogether, you might be surprised at how much extra money you uncover to help pay down your debt.

Focus on High-Interest Debt

If you have several debt obligations, focus on paying off those with the highest interest rates first, which is most likely your credit cards. Pick the card with the highest interest rate and apply any extra money you have to the monthly payment while paying only the minimum due each month toward your other debts. When that first debt is finally paid off, turn your attention to the debt with the next-highest interest rate. Continue the process until you eliminate all your debt.

Lower Your Interest Rates

Seek ways to obtain lower credit card interest rates. Take advantage of offers you receive from credit card issuers that feature lower interest rates on balance transfers. Be sure to check the fine print to ascertain the length of time for which this rate applies so that you won't be hit with an exorbitant rate increase down the road. If you have a good payment history with your current credit card issuers, another option is to contact them and ask for a rate reduction.

Refinance Your Mortgage

If mortgage rates have dropped since you first purchased your home, explore the possibility of refinancing. You could end up owing much less on your home while lowering your monthly payments. Use the extra money each month to pay down your high-interest debt. If you owe more on your home than it is worth, look into federal government programs such as the Home Affordable Refinance Program: You can possibly trade in your current mortgage for one more suited to your budget.

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