After staring in confusion at all of the different solutions to reduce debt I have settled on one plan.
Deep breath….and here we go!
- Total my debt.
- Rank in order of highest to lowest interest.
- Cut back on unnecessary spending.
- Pay off highest interest debt before lower interest debt.
I decided to go with this approach because I think it will fit my situation better. I have already added up my debts and assets and I keep track of my finances with Microsoft Money.
The highest interest I have falls on my Discover credit card.…..I won’t even mention what that rate is. Some months the interest charged on that balance is more than the payments I make on some other cards. So my solution to eating away at (and demolishing!) this debt is to pay the minimum on all of the other debts and put any extra money on this super-high interest rate card.
Some people will use the approach where you pay off the smallest balance first regardless of what the interest rate is. I thought of using this first but when I saw the humongous interest fees being charged on that card and compared them to the amounts being charged on other cards I changed my mind.
When I become a bit braver I will post the financial statements on here just to show how things are going…..but for now I guess you will just have to take my word for it.
Discover card is murder! I was able to talk them down a bit with my interest rate. I went from 22% to 5%! I’m on a repayment plan with them for 6 months as well; paying $180/month for 6 months at the agreed 5% to pay down my balance. Its been about three months now and for the first time in years I am starting to see that “available credit” mark; very exciting for me as I have never had ANY luck with convincing a creditor to lower my interest rate(s). Score đŸ™‚