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Author: Bottles Two stars, 250 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 308782  
Subject: Re: What to pay first?? Date: 4/23/1998 9:01 AM
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Klepley,

Congratulations of taking the first step... Wanting to get out of debt! Realizing that this is working against you is one of the biggest things to get past.

There is no concrete way to get out of debt though and often its a combination of some fundametal guidelines, your own situation, and some physcological factors to keep you motivated. Ultimately its your choice on how to proceed and there are no right/wrong answers. Just taking a look at the data you provided:

1. Card 1 - APR 11.9% 6000.00
2. Card 2 - APR 11.9% 6000.00
3. Card 3 - APR 18.9% 2000.00

Fortunately you have pretty decent APRs, save the 18.9, but that is the lowest balance. That more than likely should be your first card to attack. After that its just a matter of choice, and you might want to flip flop paying more on card 1 one month and then card 2 the next month, so they both come down at an even rate. Or you might just pay one card off and move on to the other... That is the choice part I mentioned. There is not much difference in either approach.

A few general things, you should be tracking your expenses and have a budget (even roughly sketched out). Those two items are very helpful and can keep any best intention from going awary. Your budget will tell you how much extra you can pay to reduce your debt load.

With that in hand the nest step I have heard and am using is to add up the minimum payments of each CC, then add in that extra amount you can afford. Look at that total as one single payment each month. From here on out, until you have paid everything off that you need too, each month you'll pay that amount. As card balances drop to zero you have that extra amount plus the previous minimum more to apply to the next card you tackle... and so on.. and so on..

One thing, there is a great Boost/Motivator to see progress and that generally translates into Zero Balances. That is the Phsycological benefits I mentioned. In your case your worst card (18.9%) has the lowest balance, your lucky in that that should be the first card to be paid off.

Hope this helps!

Rob

Bottles
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