Debt reduction can take many forms, some easier to manage than others. The obvious way to reduce debt is simply to pay it off, however most people who are dealing with significant debt find that difficult to do. One of the most successful methods of dealing with debt is the Snowball Method (as named by Dave Ramsey).
This is really quite a simple technique. Basically, you need to list your debts from the smallest to the largest. Determine how much all the minimum payments add up to every month. Then decide how much more than that total you can afford to pay every month.
Take that "extra" payment and add it to the minimum payment on the debt with the lowest balance. Once that debt is paid off, take the amount that was being paid towards it every month and add it to the minimum payment on the debt that now has the lowest balance.
Continue to roll the payment into the next smallest debt until they are all paid off. Or, if motivation is an issue, you could take some or all of the "extra" money and buy yourself a reward after each debt is repaid. Then continue with the snowball process the next month. This reward can be a great way to keep motivated about paying off debt.
The great thing about this method is that you see regular progress in reducing your debt. Because you start with the lowest balances, you'll see debts being cleared much quicker than by working on the larger ones first.
The disadvantage to this method is that by starting with the lower balances first, you'll actually spend more in interest in the long run.
If minimizing interest is your top priority, order your debts by interest rate - highest to lowest - rather than the outstanding balances. Start repaying the debt with the highest interest rate first, and roll the payments into the next highest rate debt as each one is paid off.
This alternative method is still quite effective, but because you won't see results (debts being cleared) as quickly, it may be more difficult to stick with it if motivation is a problem for you.
