Almost everyone has suddenly become aware of the cost of debt and many are now actively looking to reduce debt cost and stay ahead of the game.

But just how do you reduce that cost?

The first way to look at the debt cost is what you are getting in return. Is the debt paying its way or is it dead debt. Here’s what I mean

Let’s say the debt is on a new ride on mower you have bought and last season it was really fun to drive around the lawn on the weekend but now it’s pretty much used one day a week. After all who needs to cut their lawn more than once a week?

So for 6 days that big old debt sits and chews up your spare cash. That’s dead debt. But what if you rented it out to your neighbors at a price everyone was happy with. I know you didn’t mean to get into the lawnmower rental business but why not use what you have and make everyone’s live a little easier.

Now the income from that mower pays its own debt and maybe some other debt as well. That’s debt paying its way.

So the first thing to do is look at what you already have and what is costing you money. Look for an inventive way to make it pay for itself. And opportunities abound. We just don’t see them because we are not looking for them.

You cannot save yourself out of debt. You have to manage yourself out of debt and making your existing debt pay you is the first thing to look for.

The second thing to look for is what is costing you money that you don’t need and don’t use. Maybe you have something on credit – exercise machine, golf clubs, bicycle, camper, holiday home – that you don’t use and you don’t need. Get rid of them. Kill that debt. So maybe you lose some money because you are selling into a weak market but if you get rid of it the debt is gone. It’s kinda like cutting off a gangrenous foot. It’s sad to see it go but it’s killing you to keep it. Cut it off.

Radical I know but think about it and go prowl around the house or office looking at everything with a new perspective. If it’s not paying it’s way it needs to be gone.