Hi everyone I'm Laura Adams and you're listening to the Money Girl Podcast.

If you want to know the personal finance and productivity tools that I use to earn more, save more and accomplish more,

visit smartmoves to growrich.com and click the button that says tools to get all my recommended resources.

This is the second in a two-part series about how to get out of debt faster.

Part one gave you five tactics to reduce the interest rates on your debt so you can make

lower monthly payments and use the savings to pay down balances ahead of

schedule. In this segment I'll cover another major strategy, reducing your principal or the actual amount of debt that you owe.

The easiest way to reduce your debt is to pay it down using cash savings.

I realize that most people don't have a big stash of excess

cash lying around. But think about what assets you have like investments, cars,

boats, equipment or jewelry that you could sell to raise cash.

Paying off a debt that's charging you 20% interest is just like finding an investment

with a guaranteed 20% rate of return that's tax-free.

In other words, parting with your cash to get rid of expensive debt is a smart financial move.

However, don't use every penny of your cash to eliminate

debt. It's still important to keep a reasonable cash cushion that would keep you

safe in an emergency. Additionally, never take an early withdrawal or borrow from a 401k or IRA to pay off debt.

The benefits you give up and the penalties you have to pay when you tinker with a retirement account are just too high.

Many people want to know if it's smart to get rid of their home mortgage as soon as possible.

Since mortgages have relatively low interest rates and come with a tax

deduction, they're the last debt you should pay off. For more on this topic, be

sure to listen to a previous two-part podcast called

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