- 1). Reduce W2 or W4 withholdings. The W2 form has a box that asks you how much you would like withheld from each paycheck.This amount of money can be used to help you pay down your debt. Tell your employer you would like to modify your W2 or W4. Indicate "0" in the withholding box.
- 2). Count yourself as an allowance on your W2 or W4. Single people may get less money taken out of each paycheck for income tax if they place a "1" instead of a "0" in the box where it asks for the number of allowances. Borrowers can use the extra money left in each paycheck to pay down debt faster.
- 3). At income tax filing time, get help to make more deductions. Ask your accountant or tax preparer if there is room for more deductions. Consider things such as student loan interest, retirement contributions, business expenses and charitable contributions.
- 4). Ask the bank if you qualify for a consolidation loan. Consolidating debt into one big loan could mean a much lower interest rate. With a lower interest rate, more of your debt payments will go toward the principal balance. Get an idea of the total amount of debt you have. Go to the bank and ask if you can qualify for a loan for anything close to that amount. You can go to credit unions and other banks to compare interest rates to find the best deal.
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