1. Never get a payday loan.

Although your bill payments are looming, or you have inevitable expenses (like rent or groceries), never get a payday loan. Payday loans have much higher interest rates than other kinds of loans: you will end up paying much more than you expect. Payday loan companies charge you various fees on top of the interest rates. Even though most people who get payday loans expect that they will only need one, the Centre for Responsible Lending (a not-for-profit organization) estimates that close to 90% of people who get a payday loan will have to come back for another loan. This causes a cycle of debt and often traps people in financially untenable situations. Rather than getting a payday loan, consider getting a line of credit, which would be available to you as necessary. Consider getting overdraft protection (but not fee-based bounce protection) at your bank or credit union. Talk with your creditors to arrange new bill payments: a late payment will cost you much less in interest than a payday loan. Get a cash advance on your credit card. These solutions will cost you much less than a payday loan.

2. Pay off your credit card first.

Second only to payday loans, credit cards have the highest interest rates in the loan industries. Carrying money on your credit card is not wise because it will cost you the most in the long-term. Investment experts agree that the best way to pay off your debt is to pay the highest interest rate item off first. This might mean paying as much as you can afford to your high interest credit card while paying only the minimum on other, lower interest loans.

Some people get discouraged paying their highest interest debts first. They would rather pay off a small bill entirely in three months and have this checked off their list. Although once in a while this is acceptable, you must always remember that your priority is to pay off the high interest debts first, because this will save you the most money in the long term.

3. Consolidate your debts.

There are various ways to consolidate your debts. You can do this through professional debt consolidation services (often offered free of cost by non-profit organizations). You can also do some comparison shopping and find a line of credit for the lowest interest rate. Taking a line of credit at a lower interest rate than your current debt load means that you can pay off your debts using your line of credit and then have only one monthly payment to make. This will lower your interest rate, which will allow you to begin paying off the

4. Pay the Principal.

Although your credit card or phone bill might claim that you only need to pay the minimum amount each month, if you can afford to, always pay more. Sometimes the minimum amount is only equal to the interest. If you are only paying the interest on a debt, you will always have the principal to pay, and you will never gain ground. Putting down more than the minimum amount, even if it is a little as $20 or $50 a month, will make a difference in your overall debt.

5. Get credit counseling.

If you are only able to make the minimum payments on your debts each month, you are in need of credit counseling. A credit counsellor will go over your specific expenses and earnings each month. You should be able to create a feasible budget, wherein you will be able to pay down your debts in the most money- and time-efficient manner possible. Check the internet or your local phone book to find credit counseling services near you.

Remember: you can overcome your debt. Responsible spending and well thought-out payments can make your debt load disappear.