* Repay High Interest Loans Some debt that is incurred has a higher interest rate than others depending on type of loan and time at which money was borrowed. Many times car loans and student loans have highest interest rates, while other debts like medical bills may have little or no interest accumulating. Although it might seem like a good idea to pay off bills that have a lower total balance to eliminate that payment, this is not always best option. In long run it is more beneficial to pay off debts that have highest interest rates first.

* Create an Emergency Money Account Try and work out a plan so that your family will have a little extra money in case of emergencies. Even putting a minimal amount of money back from each paycheck makes a lot of difference. The key is to be consistent, decide on an amount a stick with it. Another option is to save unexpected income, such as gifts or tax returns, for emergencies. It is estimated that one should save at least 15% of their annual earnings in a savings plan; this amount will vary according to your particular situation.

Some companies will tell you that because you are not a professional negotiator, credit card companies will still take you for as much as they can. That is a possibility. If you are unsure about taking above steps yourself, you can check into debt settlement, debt consolidation, or consumer credit counseling services. All of these options promise to reduce your debt by anywhere from 40-60% and to be debt free within 1-5 years. Be careful, though. Some will take an upfront fee of up to thousands of dollars, which doesn’t get applied to your creditors. Others claim to be non-profit and will take a donation, but donation may seem like just another bill to pay. Further, they may guarantee to protect your credit rating from bankruptcy, but that doesn’t mean that your credit rating will come through cleanly because you are dealing with a debt relief service.

Do plenty of research before signing on with any of them for debt relief.