This will be the last guest post of this week, as we are coming back from vacation this weekend. Today’s guest post is from No Credit Needed, one of my favorite blogs!
I have been writing about debt and debt reduction for more than two years. Before you decide to get out of debt, may I suggest the following:
1. Create a monthly budget.
2. Create an emergency fund. (The amount will vary, but I usually suggest an amount between $500 – $2000, depending on your family circumstance.)
There are MANY methods for getting out of debt. Here are three of the most popular.
1. Focus On Lowest Balance: List all of your debts lowest balance to highest balance. Pay all minimums. Put every extra dollar towards your LOWEST account balance. This method focuses on the emotional boost that you will receive whenever you pay off those smaller accounts.
2. Focus On Highest Interest Rate: List all of your debts highest rate to lowest rate. Pay all minimums. Put every extra dollar towards your HIGHEST interest rate account. This method focuses on the “mathematical reality” that paying off HIGHER rates FIRST will allow you to pay the LEAST amount of interest, over time.
3. Focus On All Debts Equally: List all of your debts. Pay all minimums. Divide your extra dollars between ALL accounts. Pay extra towards every account. This method allows for a steady decrease “across the board”.
Now that you have the methods, choose one for yourself. (Personally, I favor method 1. I enjoyed watching my accounts disappear, one by one, as I worked my way out of debt.) Choose a method, stick to it, and get out of debt. Good luck!
I want to thank My Two Dollars for allowing me to be a “Guest Author”. My Two Dollars rocks!
(And thank you to you, No Credit Needed!)