Best ways to pay off your debt

Now is the time when bills are starting to pile up. From all those Christmas purchases, to that big screen TV that was purchased for the big game; it all needs to be paid for.

However, if you aren't careful, you could be paying a lot more than you need to.

Here are some simple tips to pay off your bills sooner:

1. Pay more than the minimum.

Paying the minimum only prolongs the agony, and increases the amount of interest you'll pay. It's best to cut other expenses and put that extra money toward the debt.

2. Combine your bills onto the form with the lowest interest rate.

If one card is at 18% and another is at 12%, that extra 6% can be put toward your payments. Some banks also have promotional offers to combine all your credit card balances and pay one low rate for a set period of time.

3. Consider cashing out your savings and putting that money towards your debt.

Chances are you're not getting a high rate of interest on your savings. If you're paying 12 percent interest or more on your debt, paying it off quicker is like getting that percentage back in the long run.

4. Get a home equity loan.

A home equity loan helps you save in two ways. First, you trade in your high interest loan for a low 6-7% loan. Second, a home equity loan can count as a deductible item under most income tax returns.

5. Check with family or friends for a loan.

While not always easy to ask for, a loan from family or friends will probably come with a lower interest rate than you're paying now. If you choose this option, it is best to clearly establish the interest and repayment schedule to avoid misunderstanding and possibly hard feelings.

6. Borrow from your 401k.

Some 401k plans allow you to borrow up to half of the value on the account. The interest rates on these are far less than those of credit cards.

7. Renegotiate terms with your creditors.

Sometimes creditors are willing to take a look at your debt situation and restructure your payments to avoid bankruptcy. Although it might add time to your payment schedule, it's better than taking the hit of bankruptcy, which will forever affect your credit.