Credit Basics
Debt Busters
Simple answers to help
you pay down your bills and put away savings
Q: Which debts should I pay first?
A: Most experts suggest putting the greatest amount of money
toward bills with the highest interest rate.
"When you think about how much you're paying in
interest over time," says Gabriel, "logically, it makes sense to pay these bills
first".
Other exerts say that paying off small debts in
the first few months has a great psychological benefit.
"Paying off a couple of smaller debts allows you
to see immediate progress, and it frees up money to use toward bigger bills," says
April Lewis,
director of education for ConsolidatedCredit.org, a nonprofit agency
in Fort Lauderdale, Florida.
The most important thing: don't miss payments. "Late
fees average $29," says Kathy McNally, Ph.D., vice president for National Financial
Literacy at the National Foundation for Credit Counseling, "so not only are you
adding to your debt, but you risk slipping into the 'slow pay' category."
