Top 5 Things to Do

1. Stop using your credit cards.

It seems simple right? If you want to reduce your debt, stop creating more. Put your credit cards in a safe-deposit box, freeze them in a block of ice or give them to a trusted friend or family member for safekeeping. Whatever you do, remove them from your possession and begin using cash as much as possible. If you must use plastic, use a debit card.

2. Start a budget.

Develop a budget you can live with in the long run. In one column, write down your projected income per month. In another column, write down all of your expenses, such as rent or mortgage, insurance, car payments, food, utilities and any variable expenses. Be sure to include money for things you enjoy, like dinner out or a hobby. (You can still have fun while reducing your debt.) If your projected expenses exceed your projected income, you’ll need to cut expenses, increase your income or both.

3. Get debt help and support.

You can learn so much from people who have already reduced their debt. Research non-profit credit-counseling agencies, find an online community, join Debtors Anonymous or make an appointment with a certified financial planner. If your company has an employee assistance program, take advantage of it. Ask people you know who seem to be financially stable how they did it. Surround yourself with information and support.

4. Lower your interest rates.

Make a list of all of your debts, including the amounts and interest rates. If you have high interest rates, try to negotiate down your interest rates or bringing your debt current (eliminating late charges and past-due status). If you have a solid payment record, there’s a good chance the creditor will lower your interest rate. If not, see how much you can realistically pay them each month. Then, call and see what terms you can get if you promise to stick to that debt-reduction plan. Credit-counseling agencies can help with this, too.

5. Develop a payoff strategy.

Determine what your debt-reduction strategy will be and develop a debt-repayment plan accordingly. You can pay off the highest interest debt first, reduce your maxed-out cards first or pay off the smallest first—the choice will depend on what your goals are and whether you’d rather see progress immediately (by having small debts paid first) or can wait it out (paying down large balances). What’s important is for you to have a plan to reduce debt and stick to it. Tell yourself you’re choosing a bright, new future and keep focused on how great it will feel when you’ve reduced or eliminated your debt.