4 Steps to Reduce Your Debt

Here are some tips to help you reduce the debt that you already have:
Step One: The first step of this strategy involves writing down all outstanding balances in ascending order (smallest to largest). This is referred to as the Debt Pyramid.
Step Two: The second step of the strategy is to concentrate on completely paying off the lowest balance. By paying off the lowest balance, the top of the debt pyramid is eliminated. In addition to the minimum monthly requirement, you should pay as much as possible over and above the minimum. This is where your Tax Return comes in. For example, if the minimum monthly payment is $40 on the smallest balance, a check could be written for $75. ($40 minimum required plus an additional $35). Pay this extra amount every month until the entire balance of the first debt is paid off.
Step Three: Once the lowest balance is paid off, concentrate on the second position. After the balance at the tip of the pyramid is paid, add the minimum monthly payment of the first debt to the minimum monthly payment of the second smallest debt. For example, if the minimum payment on the first position was $40 and the payment for the second debt is $55, then your monthly payment to the second account would be $95 ($40+$55=$95). The benefit of using this step is that the minimum payments are already allocated into your budget. Thus, no additional money is reallocated to pay off outstanding debt.
Step Four: Continue using this strategy until all debts are paid.