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How to slash your debt from $50,000 to zero

Afraid to open those credit card bills? “Today” financial editor Jean Chatzky offers advice to those buried in a mountain of debt.

Back in the summer of 2004, the “Today” show put out a call for a couple trying to dig themselves out of debt. “Today” financial editor Jean Chatzky was paired with William and Melanie Behrend of Pensacola, Fla., whose spending landed them nearly $50,000 in debt. A year and a half after starting the project, the Behrends cut their debt to almost zero. Chatzky explains that getting out of the red doesn't have to be as painful as it seems, and that others can easily follow the Behrends' plan.

The main thing is you really have to want to be debt-free. You have to want to get rid of that pressure, that stress, that worry — and you have to want to start building a secure financial life for yourself and your kids. William, in particular, really had no interest in opening up his wallet to the world. But Melanie convinced him that getting out of debt was that important. To start, you should take these four big steps to free up money you can put against your bills:

  • Chart your spending. For the next month (and you need to do it for a month because there are some expenses that only occur once a month) keep track of every dollar you spend — especially the cash (that's where many people spend a lot of money and don't realize it). You'll start to see places you can cut back. Maybe you spend more on meals out, on little impulse purchases at the CD store, on iTunes. Once you know where you're spending, you can decide not to spend.
  • Cut larger fixed costs. You know those bills that come in every month — cable, cell phone, internet, health club. Chances are you did without these things just a few years ago, so you have to ask yourself, do you really need 900 minutes a month of talk time now? Maybe not while you're trying to get out of debt. Cut back these services and you can generally find a couple hundred dollars a month (which is a couple thousand a year to put against your credit card bills).
  • Lower your interest payments. Many people have already refinanced their mortgages, but if you haven't — and you've got an adjustable rate loan that's starting to rise — you should think about locking that rate down. You can also refinance and lower the rates on your car loans, and your student loans can be consolidated and locked in. But you may get the biggest break just by asking — as William and Melanie did — for a lower interest rate on your credit cards. If you put a little energy to beefing up your credit score (by paying your bills on time and paying down your credit cards), you should be able to reduce those interest rates even more.
  • Make big changes. If all of that isn't enough to get you out of debt quickly enough, then you should start looking at where you can come up with larger sums of money. First, file your taxes now and put that refund — which has averaged about $2,000 — toward your credit cards. Is there a second or third car you could get rid of and put the money toward your debt? Can you, like Melanie did, take on a second job or do a little moonlighting? Or do you need to downsize your entire lifestyle?

The point is — we worry about so many things in life, money more than all the rest, and it's not necessary. If you pay it down, you'll sleep better at night.

Jean Chatzky is an editor-at-large at Money magazine and serves as AOL's official Money Coach. She is the personal finance editor for NBC's "Today" show and is also a columnist for Life magazine. She is the author of four books, including 2004's "Pay it Down! From Debt to Wealth on $10 a Day" (Portfolio). To find out more, visit her Web site, .