Which debt should I pay off first? – Pay off debt fast
Do you feel like you are drowning in the number of debts you have and asking yourself “which debt should I pay off first?”
Have you got one too many credit cards? Or two or three too many like I did? Are your debts spiralling out of control and you are getting nowhere because of the high-interest charges? Are you asking yourself which debt should I pay off first?
If you answered yes to any of these then it is time to take a stand! And it is easier than you think!
The day I realised I was paying way too much in credit card and loan interest
Enough was enough! We were struggling to make ends meet. We had three credit cards and one car loan. One day I sat down and added up all the interest charges on all of our debts (excluding the mortgage) and we were paying $800 a month in just interest charges!! That’s $200 per week!! I had no idea that’s what I was paying. That is hard earned money that could be going somewhere else in our daily lives like family adventures instead! I seriously had to sit down and look at my debts and figure out which debt should I pay off first!
What you will learn in this post
In this post, you will learn the answer to your question “Which debt should I pay off first?”
You will learn how to work out what debts are being charged what interest rates. You will scrutinize your own debts and work out who is charging you the highest interest. You will then put in order which ones you need to focus on first.GET DEBT FREE: Work out which debt has the highest interest charge and pay that debt off first! Click To Tweet
A step by step guide on how to figure out which is the best debt to pay off first
- Get a paper and pen and write down the name of each credit card, hire purchase or loan and debt that you owe.
- Then right down next to each one what each of their interest rates is. No guessing here either. Find out exactly what it is. Credit cards usually have one interest rate for cash advances and another rate for purchases so right these down separately.
- Then right down next to each interest rate the corresponding amount (balance owing) relating to that interest rate. For example, you might have $800 worth of cash advances and $3000 worth of purchases on one credit card. Write them down separately as if they are two separate debts.
- Once you have all this information you then put them in order starting with the debt that has the highest interest rate, regardless of what the balances owing are. For example, it might be the ABC credit card – Cash advance of $800. Then go to the debt that has the next highest interest rate, and so on.
Stay focused – Stick it on the wall
Keep your list and stick it on your wall. Stay focused on the debt with the highest interest rate. As you pay off each debt, cross that debt off your list. As you see things being crossed off and they gain momentum it is hugely satisfying.
Pay down debt super fast – The next step
For some more great ideas on paying down debt fast, check out my post on The “Pay it Forward” system. It’s the system I use to paying off debt superfast!
You might also be interested to read how I paid off one whole credit card in just 10 days! And another post that is highly relevant is how I went from paying $280 a month in credit card interest to $0 in just 4 weeks!!
All these posts will give you some ideas on how to manage your debt better and pay it off faster.
Tell us your story
Do you have an amazing “paid off all my debt” story that you would like to share! I find it fascinating how people reach the end of their tether with their debt and take drastic actions to reduce their debt and change their lifestyle to live within their means and to never be in debt again. I would love to hear from you! Contact me!