Many people run into financial troubles at this time of year. All sorts of emotions play into the decision to rack up debt over the holiday season. But the biggest emotions show up when the credit card bills come rolling in.
If you’ve got yourself in a situation where you need to pay off debt, try tackling the highest interest loans first. Consider the following situation:
- $200 on a bank credit card at 2.9%
- $500 on a department store card at 18.8%
- $1200 on a gas card at 27%
- $15,000 on a home equity loan at 7%
Although it might feel good to get rid of the $200 bank credit card debt as soon as you find $200, that’s the loan you want to repay last. It’s the lowest interest loan. It makes far more sense to tackle the 27% gas card first. So make the minimum payments on the other cards and put the rest of your money toward the high interest debt.
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