• Most importantly: you should be trying to uncover your creditor’s bottom line. What is the minimum they’ll accept? It varies from situation to situation, but 50-70% is not out of the question.
• Do not agree to pay more than you can afford under any circumstances. You know your own financial situation better than your creditors do, and agreeing upon a settlement package that you can’t afford puts you in a very bad position.
• Do not be intimidated. You owe money, but you still have rights. Read the Fair Debt Collection Practices Act (FDCAP). Do not let them threaten or harass you.
• If you make a request that is denied, ask to speak to a supervisor.
• Negotiating can take days or even weeks. Try not to get discouraged.
• Your creditors will usually find a lump sum payment more attractive than a payment plan. Keep this in mind when negotiating.

Finally, when you come to an agreement with your creditors, make sure that every detail is put into writing, then signed and dated by both parties.

You got into debt in the first place because you didn’t have enough money to pay for things. Now that you’re in debt, you still don’t have enough money to pay for things, and you have to pay back the debt that you owe. Then there’s interest to keep in mind as well.

Let’s face it, in most cases you won’t be able to get out of debt as soon as you’d like by simply making small spending cuts. If your debt is large – and if you’re reading this article, it’s possible that it is – you’ll want to look to your lifestyle. Can it be adjusted to help you reduce your debt in a shorter time? Lifestyle changes are significant, but significant action generally produces significant results.

Say you are considering using the services of one of these companies. As with anything, you will want to research the company. Just because the company is run as a non-profit organization doesn’t mean they are trustworthy. What in particular should you look for?

Fees are important to take note of. They can be disguised as “required contributions”. Read any written agreement carefully – it should describe the services they are to perform, payment term for said services, how long it will take to achieve results, guarantees, etc. Know what you are signing up for. You will also want to verify that your creditors are willing to work with the agency you choose.

Any company that claims they can instantly repair your credit score is a scam. Maybe they do this  by creating a new, false identity for you. In any case, it’s illegal. Rebuilding your credit is a long-term process. If it sounds too good to be true, it probably is.

Any company that requires you to pay money to get a loan should also be avoided. Advance fee loan scams are illegal – the FTC requires that no one can require a payment until you actually receive a loan or credit. Be wary of debt consolidation loans – don’t be quick to give away your credit card, bank account, social security number, etc.

Finally, one of the best ways to protect yourself from being scammed: check the company’s standing with your state attorney general and the Better Business Bureau. Find out how long they have been in business and their reputation. Using a company that is a member of the National Foundation for Credit Counseling (NFCC) is also a good idea.

Smoking. If you smoke you already know this and have probably thought about dropping this expensive habit. It’s better for you to quit – for both your health and financial well-being. But I’m not here to lecture you.

Cable / cell phone. Are they really necessary for you? You might think so, but people lived without cell phones for a long time. Without cable, you might become more productive as well as saving money! Of course the savings aren’t huge, but they can be over a period of time. And keep in mind that you are trying to reduce your debt as quickly as possible, after all.

Eating out / coffee shops. Many people enjoy the convenience of having others prepare your food for you. But preparing your own food is cheaper – the extra costs of eating at restaurants can add up faster than you think. Who knows, if you learn to cook well enough, it might even taste better too!

Housing. This is a fairly big decision, but if you are serious about reducing your debt, consider moving to a cheaper location or getting a roommate. Big decisions can result in big savings.

Car. If your household has more than one car, you can save a significant amount by dropping one. Save on car payments, insurance, gas, maintenance, etc. There are benefits to alternate methods of transportation as well. Carpooling and riding the bus are good for the environment; biking is a good form of exercise.

Schooling. Fact: private schools are expensive. It depends on the school, but it is probably safe to say that you will save thousands each year per child you send to public school, rather than private.

The simplest way to reduce debt faster is to put more money towards paying it off. If you don’t have any extra funds, you can always raise them with a little effort. Sell stuff for additional income – everyone has things they don’t need! Put any skills you have to work making money. Are you good at teaching? Try offering tutoring services. Can you fix things around the house? Offer a repair service.

You don’t even necessarily need to be skilled at something to make extra money. Depending on your level of commitment to reducing your debt fast, you can always look into taking a second job. Spending less combined with earning more will always result in your debt vanishing quicker.

It sounds easy enough, but take note of several things. First, how long is the introductory period? Legally, credit card introductory periods must last at least six months. Then, you will want to know what the APR is after the introductory period (lower is obviously better). Do some math and figure out how long it will take you to pay off your debts to see if this is worth it.

Various stipulations are associated with introductory rates . Make sure you qualify for the introductory rate in the first place – don’t assume you are always getting the advertised rate! The rate you get will depend on your credit. Also, you’ll want to know whether the introductory rate applies to balances transferred, purchases, or both. Understand which types of balances receive which rates.

Finally, balance transfer fees could increase your debt rather than reduce it, so verify any information about such fees before you apply.

Budget realistically, but if you are determined to reduce mortgage debt, you should be paying more than the minimum payment. Period. The faster you pay off your mortgage, the better off you will be financially. What does this mean? Reduce your mortgage debt as quickly as possible.

More frequent payments can help you save money too. Rather than making a monthly payment, try a biweekly plan. Pay half the amount you would pay every month, but pay it every 2 weeks. This can save you a significant amount of money as well as shorten the term of your mortgage, which is great news for you.

1. List all debts from smallest to largest balance. If two debts are very close, move the one with the higher interest rate above the other.

2. Pay the minimum on each debt, and put any extra funds towards the first debt on the list.

3. Once the first debt is paid off, cross it out and continue the process with the next debt on the list. Add the minimum payment from the previous debt to the current one.

Much of the success of this method can be attributed to human psychology. Bills are eliminated as the overall debt is reduced, producing positive feedback. Mathematically, paying off the highest interest debts first is optimal. However, in practice, the debt-snowball method may be the best method of reducing debt.

Let us look at a simple example of how to reduce debts using this strategy. Say Alice has the following amounts of debt and funds:

• Credit card 1: $100 balance, $25/month minimum.
• Credit card 2: $200 balance, $20/month minimum.
• Car payment: $5000 balance, $200/month minimum.
• Extra $50/month to devote to reducing debts.

Alice would pay $75 ($25 minimum + $50 extra) per month towards credit card 1, $20 per month towards credit card 2, and $200 per month towards her car payment. This continues until credit card 1′s balance is zero.

Then, Alice pays $95 ($25 previous minimum payments + $20 minimum + $50 extra) per month towards credit card 2 and $200 per month towards her car payment until credit card 2′s balance is zero.

Finally, Alice pays $295 ($45 previous minimum payments + $200 minimum + $50 extra) per month towards her car payment until all of her debt is eliminated. Every time a debt is eliminated, the payments from that debt are applied to the next debt to be paid off, resulting in a “snowball effect”.

Credit counseling, or debt counseling, is likely the first service you should consider to reduce your debt. They will assist you by consolidating your debt into a lower single monthly payment. This reduction in payment is usually 10-20%. Furthermore, credit counseling companies reduce your interest rates significantly, allowing you to get out of debt much quicker than you would be able to on your own. There are other side benefits, such as possibly improving your credit score.

Debt settlement companies are another service you can use to reduce your debt instantly. They help you negotiate with your creditors to agree upon a lower balance that will be counted as payment in full. This payment must be made as a lump sum. In some cases, you can negotiate directly with your creditors rather than through a company. Though debt settlement sounds attractive, be warned that there are negative aspects. Two major issues are the impact it has on your credit, and the forgiven debts are reported as taxable income.

Of course, not all credit counseling companies and debt settlement companies were created equal, so do your research.

Bankruptcy is a “last resort” option. Contact an attorney if you are interested, but be careful when considering bankruptcy. There are consequences associated with it, most notably the large negative impact on your credit.

First – lower spending. Yes, it’s obvious. Try tracking your expenses for a month and see where your money is going. Are you spending too much on coffee? Cigarettes? Cell phones? By tracking each expense, you will be able to easily identify if you are spending too much in any one place – when that money could be going towards reducing your debt instead.

OK, so you’ve already stopped spending on unnecessary things. What else can you do? One option to consider is consolidating your debt. You can do this with home equity loans or line of credit, refinance and use your equity to pay off debt, or get an unsecured loan. For some, credit card balance transfer offers may be of help as well. There are downsides to these debt consolidation options, and that is that they are limited by your credit rating. If you don’t have good credit, these may not be viable.

Debt management plans are good options to reduce debt quickly, even for those with less than optimal credit ratings. Enrolling in a debt management plan can net you lower monthly payments, lower rates, and lower balances. As an added bonus, it will help improve your credit.

Negotiating with your creditors is another possibility. This is known as debt settlement, and reduces the amount of debt that you owe. That’s right, you may only have to pay 50-75% of what you owe. This option is generally only a possibility when you are several months behind on a debt. However, there are downsides. Debt settlement can hurt your credit score, and often you will need to pay off the entire debt at once. It is attractive to many, but be sure to research all implications of settling.