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DO YOU PAY THE BIGGER BALANCE FIRST OR THE SMALL ONES FIRST?




WHAT IS THE BEST WAY TO PAY OFF BILLS THE BIG ONES FIRST OR THE SMALL ONES FIRST

Sub: #1 posted on Wed, 08/06/2008 - 14:21

KSTINA35 KSTINA35

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There are 2 schools of thought for your dilemma.

Some say pay the bigger one first b/c the interest charged against a bigger bill results in higher interest fees. So if the interest keeps adding up, it may take a little longer to pay off.

Others say pay the little ones first so you can get them out of the way and then focus on the bigger one(s).

Being an accountant, I understand the logic of the first approach, but personally, I would rather get the little ones out of the way so I only have to deal with 1 or 2 collections instead of 6, 7, 8, 12... ;)

The choice is ultimately up to you.

Sub: #2 posted on Wed, 08/06/2008 - 14:49

desperatelyseekingsanity desperatelyseekingsanity

(Posts: 1129 | Credits: 58.41)

As Desperately said, many people start with the smallest balance because they can see progress more quickly that way. You would pay the minimum payments on all of your balances, and then add as much as possible to the minimum payment on the smallest card until it's paid off. Then you would take the amount that you had been paying on that card and add it to the minimum payment on the next smallest card, while still making minimum payments on all the others, and so forth.

Paying off the highest interest rate (not necessarily highest balance) card first is the other method that some people prefer. By concentrating on the highest interest rate first, you start saving a greater amount in interest charges right away. You would use the same philosopy of paying minimums on everything except the highest interest balance, and paying as much as possible on it until it was paid off. Then move to the next highest interest balance, etc.

It kind of depends on your personality and which way would make you feel the best and the most motivated. Good luck!

Sub: #3 posted on Wed, 08/06/2008 - 15:03

alias1958 alias1958

(Posts: 1230 | Credits: 79.88)

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