Consumer debt (for example, credit card, credit union, and in-house financing) is a very expensive way to spend their money. Interest is no longer deductible on their income tax and the interest rate is substantial. If People want to make 15 percent to 20 percent on their money, simply pay off consumer debt. And, clear all credit card balances at the end of each billing cycle. If not paid on time, people can become bankrupt too. As a rule of thumb, don’t buy anything on credit that will not last at least as long as the payments required to pay for it. Reducing debt increases net worth. But where do People start? Logically, the debt bearing the highest interest should be paid off first. This includes all of the credit card balances they have been carrying. Another way to solve the problem brings greater psychological rewards: pay off the smallest balances first. Otherwise, people may become too discouraged over the seeming lack of progress. If their consumer debt is substantial, people may need to consider paying off high interest debt
with less expensive money. Here are some potential sources of lower interest loans.
 Borrow against securities in their brokerage account. People can deduct the interest as long as it doesn’t exceed net investment income.

 Borrow against the cash value of their life insurance.

 Refinance their home mortgage or add a home equity loan to turn nondeductible debt into deductible debt.

 Borrow against their bank fixed deposits.

 Borrow against their retirement account.