Debt is something that all Americans are familiar with. Whether it is national debt, consumer debt, or student debt, all Americans have dealt with it in some way. According to the credit bureau Experian, 73% of consumers had outstanding debt when they were reported as deceased. The average total balance of these consumers was $12,875 without mortgage debt and $61,554 including mortgage. Among the 73% who passed away with debt, about 68% had credit card balances averaging about $4,531 per person; mortgage debt was the second most common type at about 37%; auto loans was third at about 25% with an average amount of $17,111; personal loans at 12% with an average of $14,793 in debt, and finally student loans at 6% averaging $25,391 owed. Although so many Americans are facing debt issues, all don’t have to.

To eliminate debt, or significantly reduce it, one must first create a solid plan and then remain committed to it.

Step #1

Review all debts. Create a document for organization and list the interest rates being paid on each loan or credit card, how much you owe, and how much money is currently devoted to debt reduction each month.

Step #2

Determine and define debt goals. Is the goal to be completely debt free or reduced to a particular level? How quickly should these goals be accomplished? Once these questions have been answered, anticipate how much will be needed to meet goals each month, and then look for ways to cover those expenses. For example, get a part-time job or shop at discount stores with coupons.

Step #3

Research consolidating debt with a home equity loan or a low-rate credit card, which would allow an easier payoff of the principal due to reduced interest charges. Some offers may include hidden clauses, such as rates that increase after a certain amount of time or higher fees than normal; so always remember to read the fine print. It may also be a smart move to consider refinancing mortgage loans when interest rates are at a low.

Step #4

Start a payment plan. High-interest debt should be focused on first followed by the second highest and so on. The snowball affect is another strategy which starts by paying off the lowest balance. This method can be beneficial when looking for quick progress, and it provides encouragement and momentum to stay committed to your plan.

Step #5

Once the goal has been completed, find ways to keep the level of debt manageable. Look at expenses versus income; determine if any further changes are needed, such as fewer expenses or more income. Begin to create savings funds, such as a rainy day fund. It is widely agreed that six months worth of expenses should be saved to decrease the chances of taking on debt in the future.