Which Debt To Pay Off First

1 Comment

Which debt to pay off first? Some experts tell you to pick the debt with the largest interest rate. That seems to make sense because high interest equals more money out of your pocket. But today I'll share how you may be better off trying an alternative approach.

In my book, How to Get Out of Debt - A Biblical Approach to Living Debt-Free, I put you in the ring. The boxing ring that is. We knock out each debt starting small and then finish strong in the heavyweight class.

By starting as a featherweight (paying the smallest debt first) we are able to completely remove a bill from the budget. There is less to manage and it feels good to completely pay off a debt in a short amount of time.

Rational vs Emotional Approach

My Knock Out Method for powering down your debt is purely emotional. It's not the black and white approach. Clearly removing the most costly debt makes sense but it usually will be the hardest debt to pay off (the heavyweight). Learning how to get out of debt takes discipline. You will stumble. So, my approach is to start small. Baby steps. Start with the featherweight match.

how-to-get-out-of-debt-book

Which Debt To Pay Off First

1. Make a list of all of your consumer credit bills (credit cards, line of credit, store credit cards, etc). List them by amount owed and interest rate
2. Highlight the lowest amount. That is the debt you will pay off first.

Tip: After you have won the featherweight round (smallest debt) then add that payment to the lowest remaining bill.

Question: How do or did you stay motivated when you paid off your last bill? You can leave a comment by clicking here.

Craig Kelley

Posts Twitter Facebook

Craig is the author of How to Get Out of Debt and an avid blogger. He strives to help people maximize their time and succeed financially as well as personally. He has been a leader in several start-up companies including Mokumax Virtual Domains & Servers, Inc. and currently HealthcareSupplyChain. Read more...

Trackbacks and Pingbacks:

  1. Obama's 2nd Term and What That Means For Your Personal Finances - November 7, 2012

    […] Pick the debt with the lowest balance and knock it out. Forget about paying down your mortgage for now if you have one. Concentrate on your consumer debt.. credit cards, line of credit, home equity, and store credit cards. See my post on Which Debt to Pay Off First. […]

Leave a Reply

Text formatting is available via select HTML.

<a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong> 

*