5 ways to reduce debt: start the new year on the right foot. These tips will show you how to lighten your financial load.

Author:Royal, Leslie E.

IN 2002, KRISTEN TATE DECIDED THAT debt free was the way to be. With a debt load of $28,000 that included student loans, credit cards, and a car note, Tate, who earned $65,000 as an account manager for a global public relations firm, began to pay triple the minimum payment of $200 each month. Tate eventually withdrew money from her savings account and paid off the balance by 2008, she was completely debt free. Now a self-employed communications consultant, the 29-year-old says she met her goals by drawing on the values she was raised with. "My parents and grandparents stressed the importance of being financially responsible. Rather than buying everything I wanted, I lived frugally and paid down my debt. I wanted the peace of mind of knowing I didn't owe anyone."


To keep debt at a manageable level, experts recommend the following:

1 Create a plan. Some experts suggest using the debt snowball, a strategy of paying off debts from the lowest to the highest balance, regardless of the interest rate. (Others advise paying off debts from the highest to the lowest interest rate.) This method is meant to motivate you since the bills disappear quickly. "It does cost a little more in the long run, but it's an effective tool that can really get you out of debt," says J. D. Roth, editor at Get Rich Slowly, (www.getrichslowly.org), a personal finance biog.

2 Increase your income. Take on a part-time job. Earn money by becoming a mystery shopper (and possibly get great services), or raid your attic and hold a yard sale. You can also turn your passion into profit in many areas such as cooking, photography, or yard work. "Use every skill you have to generate extra income. Don't be afraid to charge for services you've volunteered in the past, nor embarrassed about performing tasks others consider menial. Being debt free is the goal, and there is nothing embarrassing about that," says Deborah Smith Pegues, CPA and author of 30 Days to Taming Your Finances (Harvest House Publishers; $5.99).

3 Stop overspending. Tate sold her car for $1,000 more than the balance on her loan. That saved her $500 monthly in car notes, insurance, and fees, and immediately eliminated $12,000 in debt. Consider...

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