Most people are always lead to believe that when you have several strands of debt needing to be paid, your best plan is to pay down the debt with the highest interest rate first...but is this really the case?
According to financial whiz Dave Ramsey, interest rate is irrelevant when it comes to paying down debt. He explains it best by using what he calls the "Snowball Effect".
Essentially, you pay the payments you need to stay in good standing each month, but start chopping away at the smallest debt first. Not only do you gain a sense of accomplishment, as well as motivation to keep going when the first debt is gone, but the snowball effect can begin!
Once you pay off the small debt first, take that monthly minimum payment you were making and add it to the next smallest debt each month, and focus on putting any extra money towards that second debt. Once that is paid, continue to move the previous debt's monthly payment and add it to the next debt until you are paying down your biggest debt so fast you wont know what to do with yourself!
I can tell you from personal experience, this method is amazingly effective and completely changed our lives!
Keep track of your debt snowball with this Free Debt Payment Tool, or click to learn more about the "Snowball Effect" from Dave Ramsey!
HAPPY SAVING:)