The Tightwad’s Notebook: Lesson #16–Pay Off (Not Down) Your Smallest Debt First Regardless of the Interest Rate
This is really a page from Dave Ramsey’s book, but it’s so worth mentioning again…and again…and again. Pay off–not down–your SMALLEST debt FIRST. If you have more than one consumer debt to pay off, this is the way to go. It’s the only way you’re going to wipe out that debt. If you pay DOWN each debt, you’ll continue to pay down your debts instead of getting rid of your debts. You have to attack and conquer one debt at a time while paying minimum on the other debts. I have used this method to get rid of thousands of dollars of debt in six months (thanks to a kitchen remodel). Today, I just paid off a hugebill (to me it was huge, to others it’s probably not) and I’m happy to say we own our cabinets and countertop–not cheap! What will we do with the monthly funds we used to pay off this bill? Put it immediately and right towards the next bill (one more kitchen remodeling bill). That’ll be gone in a few months. I can’t tell you how great it feels to get rid of a large debt.