Know you need to make changes

The first step in reducing your debt is to realize you are one of the hundreds of thousands of Americans who simply cannot keep up with their monthly bills and high interest credit card payments. Now that you are acknowledging you are behind, or about to fall behind you can utilize these easy to use tools to get rid of your debt worries now and avoid ever facing the ugly prospect of a bankruptcy. These tools are going to involve some changes in how you manage your money and where you spend it. They need not be life altering, but a few simple changes can stop the financial bleeding today.

Know your financial enemy

In your battle to financial freedom from debt, know who you are fighting and what is hurting you the most. Take out all those credit card bills and look at the interest you are paying on them. High interest debt is bad debt, the worst type you have and the kids of debt that will sink you into a debt cycle that will be hard to break down the line. The good news is you don't need to go down that road. Eliminate those high interest credit cards now, starting with the highest ones. Pay them off today in a lump sum. If this is just not doable, transfer these balances to credit cards with less than 10% interest rates. Be sure to cut those cards up after you clear them and never use them again.

Make a debt management plan

You need to make a plan to deal with your remaining debt. Getting rid of those high interest credit cards was the right move, but don't stop there. You need to add up all your bills, lines of credit and loans you are paying on each month. Look at your income and compare the two. Set a budget that can meet your financial obligations on time each month and don't miss payments. Look at your expenses each month and start making cuts wherever you can. Just simply eating in one more time a week can add up to hundreds of dollars a month (or read about how it may be less expensive to eat out). Knowing what you owe and what you spend compared to your income (your debt/income ratio) is your best tool in staying in front of a personal financial crisis. Stick to your new debt management plan and reduce your debt yourself.

Seek financial help

If you still find yourself unable to keep up with your monthly obligations, look for a credit counseling company to help you right your finances. There are several options available to consumers today to help you reduce your debt and avoid bankruptcy. Get financial help and explore your options like debt consolidation and debt settlement.

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