Credit Card Dept

Always pay off credit cards with the highest interest rate first (not the ones with the largest balance)! Always.

The interest/balance ratio stays the same regardless of the initial balance ($1000 versus $2000) on a card. However the interest/balance ratio increases SIGNIFICANTLY as the interest rate increases.

1) Pay off card 4 as soon as possible, then 3, then 2 and finally 1.

2) If card 1 isn’t maxed out, transfer the balance from card 4, then 3, then 2 to card 1.

3) Repeat until all your balances are on the lowest rate you can possibly get. Some cards offer 0% APR on balance transfers for up to 6 months, some even 12 months (http://www.creditcards.com/balance-transfer.php). Transfer the balances and then lock that card in a drawer and don’t touch it for purchases! Just pay the monthly bills.

4) Keep shifting until all is paid down.

5) Don’t get yourself into that mess again. If you don’t have the money in the bank the moment when you make the purchase… YOU CAN’T AFFORD IT!

Any little change will make a huge difference in your life. You work hard for your money, don't waste it on credit card companies.

Dave Ramsey however recommends the dept snowball. Paying off your dept starting from the smallest amount and working your way up to the largest amount. If you need more information about how to pay off your dept as fast as possible, his The Total Money Makeover: A Proven Plan for Financial Fitness is a great read.