Christine Parker: Hi! I am Christine Parker, and I am a financial planner and a member of the Financial Planning Association. I am here to discuss budgeting. Right now, I am going to talk about reducing your debt.

Many people who have a hard time sticking to a budget or struggling to keep their spending under control are burdened with debt that straps their cash. Until they get their debt under control, their financial goals will be on hold.

The key to reducing your debt is to stop adding to it. That's the reason we've talked a minute ago about reducing spending, especially a credit card spending. The more purchases you put on your credit card, the larger your balance grows. When you stop increasing your debt, you can begin making progress and paying off what you owe.

First, pay off the debt with the highest interest rate. That's almost always the credit card debt. Stop using that card so that each payment you make not only covers the interest, but also reduces the principal.

It's essential to avoid new debt at high rates, Generally, that means credit card debt. Stop using the credit cards that charge the most or maybe even stop using credit cards altogether.

Next, always pay more than the minimum due on your credit cards. The minimum generally covers your interest and a very small amount of principal. To get rid of the debt you have to reduce the principal on which the interest accumulates.

Finally and crucially important, never ever skip a payment or pay late. With late fees averaging $35 and sometimes reaching $39 you're increasing your debt substantially each time you miss a due date. You're card issuer generally raises the interest rate it charges when you are late as well, compounding the problem.

Some financial experts suggest paying off cards with the lowest balance first so that you can feel some sense of progress. As you move through the budgeting process, and begin setting goals, you'll be able to more readily define where you're trying to go, and by managing your cash flow more efficiently and being really tough on yourself when necessary, you'll find your way there.