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This year I have gotten set on implementing debt reduction strategies and getting entirely out of debt. So, recently I have been examining debt reduction ideas of some of the top, renowned Christian personal finance advisers. From what I read they all have a few tips in common.

Initially, each adviser recommends establishing an emergency fund of at least one thousand dollars. Having this specific emergency fund helps keep you from resorting to using credit when an unexpected emergency comes up. Some ways to create this fund quickly are to:

1. Sell some things that you no longer require or want;
2. Find one thing you’re spending money on each day and cut back on that investing or eliminate it altogether. One example would be to take your lunch to the office instead of eating out. Take the amount of money you would normally dedicate to lunch and combine it with your emergency account.
3. Switch your cash value life insurance to term life insurance. Move the cash that you will get back into the crisis account.

Next, it’s encouraged that you write down all your debts and include the quantity, the monthly payment amount, and the interest rate.

Here’s where things vary a little. Some advise that you use the snowball effect and also pay off debts coming from smallest to most significant. Others recommend you pay the debt with the highest interest rate first then work your way through every one of the debts until they may be re-paid. I’ve chosen to pay off financial obligations using the snowball technique because I need the particular motivation of watching debt get crossed off my list as quickly as possible.

Once you’ve got your plan of action, you must ensure you have a extra of money to begin implementing your debt reduction tactic. You will have to put together an allowance to see if you have any extra money to put your debt reduction plan into action. If you’ve got enough extra money, you can go ahead and start paying off your bills. However, when there is no surplus, you should start looking for places to generate some surplus.

A few suggested places to get extra are:

1. Obtain a second job;
2. Reduce your auto insurance rates by raising your current deductibles.
3. Temporarily halt 401K contributions;
4. Negotiate high interest cards into a second home loan; and
5. Mazimize your current tax deductions. Instead of having tax refunds annually, get the money in your current paycheck each pay period.

However you choose to get your surplus, it should be used to eliminate financial debt. These are just a few tips and methods that I hope you are able to use to get out of debt.  What tips do you have for getting out of debt?

1. Reduce the interest rate on your mortgage.  On a $100,000, 30-year mortgage, reducing your interest rate by just 1% (from 8% to 7%) would save you $68.46 per month.
2. Consolidate high interest credit cards and finance loans into a second mortgage.  You can free up a significant amount of money each month by consolidating debt; and you have the added bonus of possibly being able to write off the interest paid on this second mortgage.  This option is not for everyone.  Read Four Reason to Consolidate Debt With a Second Mortgage to see when debt consolidation is the right choice for you.
3. Maximize your IRS deductions.  90% of Americans receive a tax refunds.  By failing to take the correct number of deductions, you’re providing an interest-free loan to the federal government.  By receiving that money in each paycheck, you’ll put the money back into your budget to be used to pay off your debt.
4. Raise the deductibles on your automobile and homeowner’s insurance.  This won’t save you a ton of money, but even the little things add up.  Before doing this, make sure you have a cash reserve built up to cover the cost of the deductible amount.  Read Five Quick Ways to Build a Cash Reserve to see ways to build your cash reserve.
5. Switch from whole life insurance to term life insurance.  Whole life insurance is always more expensive than a term life policy because of the savings component and additional fees associated with them.  Read Why Term Life Insurance is Better than Whole Life Insurance to learn why term life is better than whole life insurance.  [Caution:  Never cancel a life insurance policy before you have a new policy in place.]
6. Cancel credit life insurance.  Credit life pays off the debt owed on car loans and mortgages in the event you die before the loan is paid off.  Credit life is a decreasing value life insurance policy.  With every payment you make on the loan, the value of the policy goes down, but the premium never goes down.  It is the most expensive form of life insurance you can get because you don’t have to qualify for it.  If you have a term life policy in place with the proper amount of coverage, you never need credit life.
7. Temporarily stop your 401K contributions.  While you’re eliminating debt, stop the contributions and apply that money toward your debt.
8. If you own a small business (even if its home-based) have a tax review done.  60% of people overpay the IRS due to incorrect tax preparation.  There are companies that will review your previous tax returns free of charge and charge you only if they are able to get you a tax refund.  Getting a lump sum like this can give you a great jump start to your debt elimination.
9. Change banks.  If you’re paying for your checking account, it’s time to find a new bank.  Free checking is quite common, so you shouldn’t have any problem finding a bank that offers free checking.
10. Search unclaimedfunds.org for money that belongs to you.  Not every state is included on this site, so do a search for your state’s treasure hunt or unclaimed funds site.  Use this “found” money to accelerate your debt payments.

Once you’ve freed up money to apply toward your debt payments, you need a plan to get out of debt as quickly as possible.  Get your free debt elimination plan here.

Consolidating debt is not always the right thing for everyone.  If you haven't decided that your purpose for doing this is to ultimately get out of debt, don't consolidate.  You cannot borrow your way out of debt.  Using a debt consolidation loan needs to be part of a bigger plan for eliminating debt.  That being said, here are four reasons for consolidating debt with a second mortgage:

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