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What is the Best solution to paying off debt?
Okay I feel like I'm drowning in debt. I'm been in denial for years now. I never realized I had so many credit cards open. At one point I had 15 and now I'm down to 11; cards from department stores to major credit cards. I've always had the best interest from my major credit cards but the past year most of my cards have increased in interest rate as high as 18%. When I use to 7% to 9.99% this has been a shock to my system. I can't seem to sleep right and I don't know where to begin. I read different articles online; I thought Dave Ramsey seemed to be the wisest but I'm not sure if his method is the BEST. Pay off the lower amounts and then move up until they are all paid off. Of course by not using them again. I need someone who has experience with debt and what they did. I know I"m not alone but I sure do feel like it. HELP...
3 Answers
- Go with the flowLv 71 decade agoFavorite Answer
Dave Ramsey tells you to pay off the smallest ones first so you feel a sense of accomplishment.
Financially of course, the best is to pay the ones with the highest interest rate.
Do not close your oldest credit card it will harm you in two ways.
1. Length of credit history is 15% of your score - don't wipe it out.
2. You will reduce the overall available unused limits - creditors like to see money not being used.
Just cut up the cards - and don't use them again.
Keep reading Dave Ramsey and other books - they help out many people.
For good credit get all those cards to less than 30% of their available limits - this is when your rating starts going down.
To maintain top scores, charge a little something like food or gas each month and pay in full.
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- timothy pLv 71 decade ago
I can't tell you if the Dave Ramsey method is the best but I can tell you it works quite well. Start with the smallest, pay it off then snowball the payment. I wiped out my smallest card, then my next smallest and so on. It didn't take long. A big problem is learning to live without using the cards while you are paying them off. If you have really good credit you may also consider getting a consolidation loan (avoid the debt consolidation companies) from a local credit union or small bank. It will be a signature loan and have a higher rate but I doubt it will be any higher than 18%. Cut up your cards and never use them again.
The idea of paying off the highest interest first is a good idea if you have extra cash laying around but most people in serious CC debt don't have the cash to do it.
- bonefieldLv 45 years ago
lately, you want to easily remember to pay over the minimum price anticipated. in case you purely pay the minimum, the businesses can now improve your pastime because by paying the minimum you'll not in any respect get out of debt. save your debt on playing cards at about 35% of your entire line of credit. do not pay it off, in simple terms shrink. this way you're showing that you at the prompt are not a mastercard abuser yet you opt on to save a stability and pay on time so as that the credit status will be larger. conserving a minimum stability and paying on time, will improve your score because you're considered as solid. do not do a debt consolidation in case you could dodge it. Debt consolidation is especially a lot as undesirable as bankrupcy on your credit status.
