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Getting Out of Debt

A Plan to Get Debt-Free

Strategies to pay off debt.

Start by setting a budget. List all sources of income and fixed expenses, such as mortgage payments, car payments and insurance premiums. Cut costs on everything else, starting with food, clothing and entertainment. Budget Web sites can help you categorize spending and identify ways to save. Two candidates: and

Ask your creditors to help. Call the "800" number listed on your statement and ask for a supervisor with authority to negotiate a lower rate and reduced payments.

Consolidate your debt to lower your interest rates and your payments. Borrow against home equity if you can because you may be able to deduct the interest on loans up to $100,000. (Caveat: If you fail to keep up with the payments, you could lose your house.)

For help, sign on with a credit-counseling service. These agencies help you set up a budget and clean up your borrowing habits. They also work out repayment plans and negotiate lower interest rates. Be aware that some credit services are more likely to rip you off than restore your credit.