UnThreaded | Threaded | Whole Thread (9) | Ignore Thread Prev | Next
Author: aja91 Two stars, 250 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 308782  
Subject: Re: Paying Off Debts Date: 6/19/2001 4:58 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 0
I read somewhere (somewher on The Motley Fool, I think) that a debt repayment strategy should be based on the lifespan of the debt. You take the minimum payment, multiply that by the interest rate, and then rank your debts according to the result. Pay the lowest one first. Like that.

My question is, should that include credit cards AND installment loans, or just cards?


I'd generally focus on the cards first as the debt in question is unsecured. If you have a car loan, then in theory you could sell the car and recoup enough money to pay off the loan. Not so with credit card debt. Granted, depreciation on a car usually won't allow this, but percentage wise you're probably closer with a car than a sweater. ;-) The other reason is that (usually) the interest rate charged on credit cards is higher than on other installment loans. By paying off the cards first (highest to lowest rates) you minimize the amount of interest you pay.
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Print the post  
UnThreaded | Threaded | Whole Thread (9) | Ignore Thread Prev | Next

Announcements

TMF Credit Center
The Motley Fool Credit Center arms you with real tools and simple messages, that will help you in every credit situation.
Pencils of Promise - Back to School Drive
"Pencils of Promise works with communities across the globe to build schools and create programs that provide education opportunities for children."
Post of the Day:
Value Hounds

Netflix Riles Investors
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Community Home
Speak Your Mind, Start Your Blog, Rate Your Stocks

Community Team Fools - who are those TMF's?
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and "#1 Media Company to Work For" (BusinessInsider 2011)! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.
Advertisement