How I did it: I downloaded an Excel spreadsheet that let me plug in numbers: of balances and interest rates for every card, tinker with which one to prioritize. It really made a big difference to see that bottom line (total interest I'll pay over the life of the debt) go down, lower and lower, if I  put the lower-interest cards on minimum autopay and throw as much money as possible at the highest interest loan.

I also took the big step of moving my educational loans, which had a very high rate of interest, onto a line of credit on one of my cards, that was offering me a very low rate of interest. It was scary, because I lost the fallback of being able to defer it, if necessary. But it turned out to be fine. I was able to pay it off and I saved THOUSANDS by doing that.

Lessons & tips: Pay the minimum on all but the loan/debt/credit card that charges you the highest interest. Period. That will get you there the fastest. If you don't believe me, get the spreadsheet and run the numbers yourself. Pay attention to the rate you're ACTUALLY paying, not the expired promotional rate you started out with.

If you're one of those who wants to start with the smallest balance first, it helps to put all but the highest interest cards on autopay at minimum. It helps to focus on one card at a time; then you can be rational, instead of emotional, about which one to prioritize.

Resources: The spreadsheet. Get it! See my earlier entries if you can't locate it on the Web through Google.

May 16, 2009, 01:01AM PDT | 0 comments | 3 cheers