How to Eliminate Your High-Interest Consumer Debt

It's easier than ever to borrow money to pay for all the things you want in life. You'll be offered financing for your house, your car, a large television, new furniture, recreational vehicles and the like. Even for smaller items you can use a credit card to get yourself into a significant amount of debt. If you're not careful, you can easily wind up with $20,000 or $30,000 in miscellaneous debt that seems to keep piling on up. Most of the loans you'll be given on all of this miscellaneous debt have very unfavorable terms. You can easily find yourself in loans where you're paying 25% or 30% in interest each year. Here's how you can get yourself out of this kind of sticky situation.

Get Organized. Read over all of your statements as carefully as possible. Find out what all of the interest rates are on each of your debts. If they're not on the statement that you have, call up the company providing the loan and ask. Put all of your debts that have an interest rate greater than that of 10% APY into a pile. These are the ones you need to take action on first.

Survey the Damage. Take all of your higher-interest loans and total up all of the balances. These should be listed right on each of the statements for your debts and should only take a few minutes to do.

Visit the Local Credit Union. Take all of your most recent statements on your high interest debts and walk down to the local credit union. Be sure that you visit your local credit union, and not a bank, especially a major chain bank. Smaller credit unions usually will offer you better interest rates. Speak with a loan officer and tell them that you would like to get a small personal loan so that you can pay off your debts quicker. Unless you have terrible credit, you should be able to get a decent loan. If there aren't any good options, you might consider checking out the online lending service called Prosper.

Take the Check and Pay Off Those Debts. Take the money that you received from the personal loan, deposit it into your checking account and pay off those high interest debts the day that the check clears. Don't let yourself get tempted to spend it, it'll only put you further in the whole. After you pay off your debts, don't be fooled, you still owe the money, now it just doesn't hurt as bad.

Get in Attack Mode. Now that your interest rates are more reasonable, seriously work on paying down your debts. Start with the highest interest rate loan first and systematically pay them down. You can find all sorts of ways to save money in your budget if you go through it with a fine-toothed comb. If you're like most Americans, chances are you don't even have a budget. Creating your first budget and following it will put you well on your way so you can spend less money and put it towards your debts.

This is the hardest part of the equation, it involves actual work, not just moving money around on paper. You're going to sacrifice to dig out of the whole that you've put yourself in. This means working extra and spending less money. It's hard work, but it's the only way to do it. There aren't any secrets that are going to make your debt magically disappear.