- 1). Contact creditors and alert them of your goal to reduce debt fast. Ask if you can renegotiate the terms of the debt to reduce interest rates or repayment periods. Note that reducing the monthly payment might make it easier to repay the debt month after month, but it will extend the period of payment.
- 2). Consolidate debt into a lower-interest loan through an equity line of credit or personal loan. An equity line of credit offers the lowest interest rate available, but the your home secures this debt, so non-payment can result in foreclosure. A personal loan is another option, if you qualify for a loan large enough to cover your debt.
- 3). Make more than the minimum payment. Pay as much as possible toward the debt each month. This reduces the debt and the amount of time that the interest rate compounds against the debt.
- 4). Consider a snowball method when there are several debts to pay down. In this method, you make the minimum payment on all the debts except one. You pay the minimum plus as much extra as possible on that one debt (usually the one with the highest interest rate), until it reaches zero. Then, move on and pay off the second debt.
- 5). If you really need to reduce debt fast, consider borrowing from a relative, taking funds from a life insurance policy or borrowing from your 401(k). But remember that these options can come at a hefty price and should only be used in emergencies.
- 6). Avoid accumulating more debt during the debt repayment process, because this only extends the repayment time. Establish a budget and stick with it, using only cash available.
- 7). Work the process until all debt is clear. You can move even faster by getting a second job.
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