Reduce your Debt

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Reduce your debt
5 Tips: Consumer borrowing has finally dipped. Here are five ways to further shrink your debt.
November 11, 2005: 11:59 AM EST

NEW YORK (CNN/Money) - We consumers get knocked for racking up the debt, but there was some good news in a recent government report.

Credit-card borrowing and other kinds of consumer debt declined last month for the first time in since November 2004, surprising the experts. If you're one of those consumers who still shudder at the thought of all your bills, don't panic. In today's top 5 Tips we're going to tell you how you can reduce your debt.

1. Cure Credit Blues

If your credit card debt is out of control, the first thing you should do is to find a new card with a lower interest rate. Your interest payments could be almost cut in half if you reduce your interest rate by just 5 percent.

So shop around! Check out rates at

You may want to think about automating some of your online bills. This way you'll become accustomed to making regular payments and you won't have to worry about your bills getting lost in the mail or not having a stamp handy. Having your bills paid automatically is also a great buffer against late fees, which can cost about $40, and increased interest rates

2. Join a Family Plan

Are your cell phone bills causing your head to ring? It's no wonder. The average cell phone user pays about $60 a month for an individual cell phone plan according to Delly Tamer of

If your bill is out of control think about getting a family cell phone plan. The rules are flexible and you don't even have to join as a family.

As long as you talk less than a thousand minutes a month and you have a friend or two who will agree to share minutes, all you have to do is figure out who will write the check at the end of the month. With a family plan, you can add people into your network for $9 to $15 instead of paying for another phone and activation fee.

Keep in mind, that for every person you add, you still have to share that same pool of minutes and going over your minutes could cost you dearly. Compare family plans at

If you have a teenager in the house, it's also a good idea to get a pre-paid cell phone. This way you can establish limits on how much you are willing to pay each month. Junior can even easily purchase additional minutes if they want to talk more. These pay as you go phones are available at retailers like VirginMobile, Trac Phone, and Cingular.

3. Shop for insurance

One place to save some cold hard cash is on insurance premiums for your car and your home.

Check out some web sites to see if you can find lower rates. For home, life, business and car insurance, check out, and You may be surprised at the result.

Remember, many carriers offer discounts to consumers who buy both their home and car insurance from them. Loyalty matters, too. If you've been insured with the same company for several years, you might get a discount for being a long-term policyholder.

When it comes to insuring your home, there are discounts for people who install smoke detectors, burglar alarms or dead-bolt locks.

And if you're at least 55 years old and retired, you may qualify for a discount of up to 10 percent at some companies according to the Insurance Information Institute. If you've completely modernized your plumbing or electrical system recently, some companies may also provide a price break.

4. Get discounts on home heating oil

If your home uses heating oil for warmth you may be able to cut your bill by buying into a heating oil group.

These co-ops are businesses and individuals that have pooled their energy buying power to purchase energy at wholesale prices. They then turn around and sell the energy to you, the consumer, at that reduced price.

Most co-ops are not-for-profit organizations and you have to pay a membership fee to join. But if you're part of another organization, ask if they offer partner discounts on oil.

For example, if you belong to the AFL-CIO, you may get a discount with the Northeast Co-op Heat USA. At other co-ops you may qualify for a discount if you are over 55 years old.

5. Think long term

If you have a mortgage with an adjustable interest rate, you may well be in for some higher monthly costs once that rate adjusts.

Many economists believe the era of bargain-basement interests rates is coming to and end. Instead of the 5.28 percent 30-year, fixed mortgage you could get back in September 2003, consumers could face rates of 6.7 percent by next year, according to the Mortgage Bankers Association.

To understand what you could be on the hook for, check your mortgage documents for rate caps -- that's the limit on how much your rate could rise once the introductory fixed rate period is over.

Go to and use their mortgage calculator to determine exactly what that would mean for your mortgage payment.

To protect yourself and your wallet, think about locking in a 30-year-fixed rate. Even at 6.42 percent, it's a bargain compared to long-term averages of 8 percent.