Be Accountable

It's amazing what people will buy when no one is looking. Having a financial accountability partner can be one of the most effective ways to rein in spending and be sensible about non-essential purchases. This person can be your spouse, a co-worker, a friend or even a professional financial expert, but the concept of sitting down once a week with them to review purchases that fall outside of budgetary guidelines is a good one. It only takes one or two times of having to explain that extra nine holes or a splurge on shoes to your accountability partner before the guilt (and a change in your decision-making habits) sets in.

Be Informed

The myriad of new credit card laws and a change in business practices since the recession are all great reasons to become reacquainted with the legalese of your current credit cards and personal loans. Have rates changed? Will you incur additional charges for letting them sit idle? What options do you have for repayment? These questions can be easily answered with a call to the customer service department of each credit account. Once you are certain of the fine print for your cards, it will be easier than ever to tackle them responsibly, paying down the most expensive debt first.

Be Diligent

If your budget is tight and the thought of paying anything more than the minimum monthly payment is a foreign one, it may not seem worth the extra effort to look at paying down debt early. With just an additional payment of $5 a month, however, it's possible to see your debt goals as achievable again. Since the latest in credit card legislation (more specifically, the CARD Act), consumers now have more access to information on how paying the minimum (or more) will affect overall interest paid. Use this knowledge to your advantage, and play around with the numbers until you see a formula that makes sense.

You'll also find that even small payments will be applied to those purchases with the highest interest rate first (as compared to pre-act practices of applying it to the lowest rates.) That $10 you threw away on a movie ticket last month may be better spent on knocking out that high-rate card a year earlier than planned.

Be Realistic

As consumers prepare for tax season, one common sentiment will often be heard: "I'll use that big tax refund to pay down my credit card debt."

While this is a noble way to apply tax refunds, it's more appropriate to consider how debt can be paid down gradually, as it is incurred, and without the help of windfall money. By developing a strategy for paying down debt in addition to refunds, bonuses or other cash that falls outside of your budgeted income, you'll be better prepared if the worst happens and you see no additional dollars this year.

Use the assistance of debt calculators to figure just how long it will take to get out of debt, and be conservative in your estimates. What matters is that you are paying it down, regularly - not that you get it all paid off in an incredible amount of time. "Slow and steady" really does win the race, in this case.

The Bottom Line

Whether you're destroying debt as part of a lifelong battle or this is a new burden for you in 2011, there is a way to get out from underneath financial obligations that cut into your time, energy and income: repayment. Paying off debt is a long journey, but one that will leave your credit score high and your sense of self-worth intact. May the New Year bring ample opportunity to raise your net worth and put those high interest rates behind you!