Five Debt Reduction Tips You Can Implement Right Now

Getting out of debt is the seventh most popular New Year’s resolution, but the question is, how many people actually follow through? If you’re in the hole for tens of thousands of dollars, even making a dent in the balance can seem like a daunting task. The trick is to start small and start now. Below, I’ve highlighted five simple tips that you can use to kick-start the debt elimination process.

1. Pulverize your credit cards
That’s right, gather all of your credit cards and a pair of kitchen shears. Chop them into pieces, throw them into the trash, and wish them good riddance. More than likely, credit cards are what got you into debt in the first place, so avoid the temptation to bury yourself further in it - stop reading this post and go have some fun obliterating your credit cards. It’s cash-only from this point forward.

2. Cancel your monthly and annual subscriptions
Are you getting the most out of your NetFlix subscription? Is it worth more to you than the freedom of being debt-free? What about the satellite radio? Premium cable channels? Gym memberships? Text messaging plans? I encourage you to get a piece of paper and a pen, list every one of your recurring subscriptions (don’t forget about any annual ones), and add up the total. You might just be stunned at the amount of unnecessary money you’re spending on a recurring basis. Cut the fat right now and apply any savings to your highest interest rate loan or credit card.

3. Stop eating out so often
It doesn’t take a rocket scientist to figure out how much money it’s possible to save by eating at home instead of restaurants. I actually have a tough time with this one, but when I really buckle down, I can easily save an extra $100 or $200/month.

If you also struggle with this issue, here’s a suggestion: take a field trip to the grocery store with your significant other and plan a meal that you can both cook together. Get a bottle of cheap wine too (a la Trader Joe’s). My girlfriend and I do this at least a couple times a month and not only are we saving money each time, but we have a blast cooking/destroying the kitchen together.

Again, figure out how much you’re saving by eating out less often and apply the savings to your credit card or loan with the highest rate.

4. Delay your next large purchase until you’re debt-free
Do you honestly need that 50″ plasma television you’ve been eying at Best Buy? Of course you don’t. Instead of running to the store and mindlessly charging over $1,500 for a new toy, try setting a goal. Put aside a set amount every paycheck - say $200 or $300 - and wait until you have the purchase price saved up. By going the cash-only route, you’ll mitigate the chances of having to pay the astronomically high interest rates and late fees associated with credit cards.

5. Lower the interest rate on your credit cards
Believe it or not, lowering the interest rate on your credit cards can be as simple as calling your credit card company and asking. It may take a little patience and persistence, but stick with it. Demand to speak to a manager or supervisor if you aren’t able to get anywhere with customer service reps. Your conversation should go something like this:

You: Hello, I’m calling to request that my interest rate be lowered please.

Rep: Yes sir, let me see what we can do for you today.

Rep: I’m sorry sir, it appears that you currently have our lowest rate available.

You: Okay, may I speak to your supervisor please?

Supervisor: Hello, this is <Name>. How may I help you today?

You: Yes, I’m calling because I need to have my interest rate lowered please. I have a 12-month, 0% balance transfer offer in front of me from <Name of competitor> that I will use if necessary, but I’d rather stay with you if you’d just work with me by reducing my interest rate.

Supervisor: Okay sir, let me see what I can do for you.

Supervisor: Sir, I’m happy to inform you that we can reduce your interest rate to 8% through the end of the year. Will that meet your needs?

More often than not, if you threaten the credit card company with taking your business elsewhere, they’ll be more than happy to oblige by offering you a lower rate. As far as they’re concerned, less interest is better than zero interest so they’ll go out of their way to keep you as a paying customer.

Conclusion

These five tips are by no means all you can do to start tackling your debt, but they are ones that are easy enough to implement today. Keep reading MoneyRemix for more in-depth debt-reduction articles and you’ll be well on your way to living life completely free from the shackles of debt.