Right now the average American household is carrying over $9,000 in credit card debt and they owe lots of other money too, and probably every person in every household would love to lower their debts, or to get rid of them completely.

Most supposed financial experts offer bland advice when it comes to getting rid of debt such as, “Control your spending and use your credit cards far less”, or “Cut up your credit cards and start paying them off immediately”.

It’s the kind of advice which is totally useless to somebody that’s struggling to make ends meet, and would have a problem putting gas in his automobile if he didn’t use a credit card.

It is true however that the best way to cut debt is to get rid of your short term and expensive loans first. Your mortgage for example is a long term debt at a relatively low interest rate so although you’ll need to keep paying if you don’t want to lose your home it would be a mistake to try and pay it off quickly.

If you’re buried under debts and are getting phone calls or even visits from your creditors then the first thing to do is to make out a list of all of your debts, and make sure you note the interest rate that you’re being charged. In short it’s time for you to start some kind of serious debt management because if you don’t then you’re just throwing away needed money.

Perhaps surprisingly, many people that are heavily in debt have a savings account that’s paying them a pittance in interest whilst they’re paying huge interest on their credit cards. This is simply crazy and if you’re doing it then pull all the money out of your savings account, and pay down as much as you can on your loans that have the highest interest rates.

If your situation is desperate and you have some small investments then cash them in too and use the money to reduce your credit card debts even further. If you’re situation is really desperate however and you have an IRA (Individual Retirement Account) or a 401k (Roth Individual Retirement Account) then you might even consider withdrawing some money in order to pay off some of your credit card debt.

Amounts will vary, but to give you a quick idea of how much you can save by paying off loans early, consider what happens if you have a balance of $1000.00 and only make the minimum required payment of 4%, and the interest rate is 14% APR.

It would take almost six and a half years to pay to pay off the whole amount, but if you were to pay double that amount every month then you’d pay off the total debt in less than three and a half years.

A quick summary of how to reduce debt would be,

* Pay off your debts that have the highest APR first.
* Make more than the minimum payments whenever possible.
* Move your debt from highest interest accounts to the lowest ones. (debt consolidation).
* Ask your current lenders if they’ll lower their APR.

The above is just to give you a taste of how paying off debts quickly can really save you money, and how doing that along with debt management and debt consolidation will eventually lead you to complete freedom from debt.

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