I have so many accounts to pay off that I don't know which one I should pay off first!
2007-02-04 12:43:03 · 17 answers · asked by Anonymous in Business & Finance ➔ Personal Finance
the one with the highest interest rate should go first
2007-02-04 12:46:32 · answer #1 · answered by B 4 · 1⤊ 0⤋
There is a TREMENDOUS approach to paying off debt that is a very proven method and well known. It's promoted by Dave Ramsey, a financial counselor type person and there are thousands of testimonials to it's success, include me!
It is called the debt snowball and here's what you do.
Most important before you begin is to freeze (literally) or cut up all of your credit cards etc. You've got to stop creating the debt to get out of it. Ok, nuff said on that cause I'm probably preaching to the choir. You start with the LOWEST balance. You pay the minimums on ALL of your obligations but this one. Then, you apply as much as you can to the balance that is the smallest. Once you have it paid off, you now have all of that money to apply to the next (plus the minimum you've been playing). You then pay off the next lowest, and now you have all the money from the first, the minimum from the second and now the minimum from the 3rd. You apply all that to the 3rd till its paid off and then go to the new lowest (the fourth). Depending on how much debt you have and how much extra you can come up with (now would be the time to make some sacrifice decisions) you may be able to get out of all this debt in 18 - 36 months typically. If need be, consider taking a second job for a time or something like that just to get over the top of the debt hill.
Good luck to you. It's a hard place to be and often feels hopeless but it's not! You can do it!
I hope this has been helpful.
Take Care,
TBG
2007-02-04 12:53:23 · answer #2 · answered by Anonymous · 2⤊ 0⤋
Pay off the one with the highest interest rate first as it is costing you the most amount of money probably. See if you can get some of the debt to low rate interest credit cards so that they are not costing as much while paying it off.
2007-02-04 13:33:50 · answer #3 · answered by Michelle 4 · 0⤊ 0⤋
Pay off the one with the highest interest rate first.
Then the next highest
And so on until all gone.
Lots of people pay advisors hundreds of dollars for that advice!
The debt with the highest interest rate is costing you the most money, that is the one you need to eliminate first.
Good luck
2007-02-04 13:00:15 · answer #4 · answered by Gem 7 · 0⤊ 0⤋
Being divorced, and saddled with many debts that I had no idea that I had until AFTER we seperated, I realized, looking through all those credit cards, and past due accounts, was to get a copy of my credit report. Personally, I believe that is the FIRST task to accomplish. Credit reports are easy to obtain, and cost all of 20-25 bucks. Start going through it, step by step. Look at each debt that you have, and start making out a budget for what you could give each creditor. But that probably would be very difficult, and still have money to live on. Call the creditor. Most creditors will have their telephone numbers and or business address upon the credit report. Most creditors are willing to work with you as long as you are willing to make the sacrifices needed. BY FEDERAL LAW, and under the CONSUMER CREDIT PROTECTION ACT, no creditor can refuse payment that is submitted to them!!!!! REGARDLESS IF THEY TELL YOU THAT THEY WILL!! This is FALSE!!!! If they do tell you that, call your state attourney general and/or the Better Business Bureau for further assistance. Get the employee's name who told you this and the creditor that you are calling, along with the date and time. But, like I said, most creditors are willing to work with you, as long as you can come to some amicable aggreement. I worked off about $9000 in about a year. In the army, that is almost a years salary. And I still had grocery, gas, and money to pay the phone bill. I sincerely hope that this helps you. Good luck to you.
2007-02-04 12:59:24 · answer #5 · answered by djbest1973 2 · 0⤊ 0⤋
Always pay the debt with the HIGHEST interest first. If there is extra money left, then you move to the next one with the 2nd highest interest and so on until it is all paid.
Get some help from your banking advisor.
2007-02-04 13:26:59 · answer #6 · answered by lg 1 · 0⤊ 0⤋
A few things to keep in mind......one of the little known factors in a credit score is that you are effected by the balance of a card compared to your limit.....IE $10,000 limit on a credit card and you have a balance of $9900......that would be the card to pay off first....instead of a card that has a $5000 limit with a $2000 balance.. As far as time....Keep your oldest card. Get rid of all the little ones. Ultimately you should only need 1 or 2 cards for emergencies. HOPE THIS HELPED!
2007-02-04 12:50:14 · answer #7 · answered by me 2 · 1⤊ 0⤋
The ones with the highest interest would be my guess. I would want to pay off all the little one though to get them out of the way and it would show my progress more. I also would pay the ones that are harassing me the most. I commend you for doing this.
2007-02-04 12:47:59 · answer #8 · answered by Becky F 4 · 1⤊ 0⤋
Pay off the one with highest interest rate first. That will minimize the total interest you are paying.
2007-02-04 13:37:13 · answer #9 · answered by Anonymous · 0⤊ 0⤋
The ones with the highest interest should be paid first then, work your way down to the ones with the lowest, but try to give them all something if possible, to avoid accessive calls.
2007-02-04 12:57:17 · answer #10 · answered by trottergirl80 3 · 0⤊ 0⤋
The best place to start is your lowest balance. It helps you build momentum. My husband and I have already paid off about 5 of our debts following this plan.
It is the one promoted by Dave Ramsey in his book The Total Money Makeover.
2007-02-04 15:24:01 · answer #11 · answered by Jen G 5 · 0⤊ 0⤋