Get Rid of Your Debt
Paying off debt in theory is easy. It’s just the execution that is hard. There’s two common approaches. The snowball approach, where you list your debts from smallest to largest and then try and knock off the small ones first so you feel all good inside and progress from there. Or the stack method where you list all your debts and then pay off the highest interest rate first.
Which method should you use? A Harvard study has shown that the snowball method works best. In their study they found that the small wins kept people reducing their debt.
So use the snowball method. You can use credit.com, creditkarma.com, etc. to get a credit report which lists all your debts. You can also use mint.com, but you have to link the debts. Then once you have a complete list (excluding your mortgage) you list them from the lowest to highest balance. Then you put all your extra debt repayment dollars on the lowest balance first and work your way down.
Credit card 1: 18% - $500
Credit card 2: 24% - $4,000
Car Loan: 3% - $10,000