by Vin Stross

Created on: August 15, 2008

The best way to get rid of debt, is to attack the balance with the highest annual percentage rate first. When that one is paid off, move onto the debt with the next-highest interest rate,
but always attack that high-interest debt first.

On that debt, you want to double, triple, quadruple minimum payments, when you're done with that one, move on to the next one. Size up bills by interest rates rather than the amount of the balance.

The amount you owe doesn't really matter when you're paying an enormous amount of interest. Try to pay the highest interest rate ones first. Muster all the funds available and get the debt out of your life. An alternative plan: knock off some low-balance bills first and eliminating a bill or two from that thick monthly pile. It makes better financial sense to pay down the highest interest rate first.

It's a lot more gratifying for some people to pay off the smaller balances within a couple months, they feel like they're making more progress.

But once those smaller balances are gone, go back to Plan A: Take the money that had been set aside to pay those bills and apply it to the balance with the highest interest rate. Muster all the funds available and get the debt out of your life.

Stick to your plan: The key to an effective pay-down plan is sticking with it. Don't let up on the monthly payments as the card's minimum payments inch down and as bills get paid off.

Once you establish a payment plan with a credit card bill, stick with the payments until it's gone and then roll it into another credit card and keep going.

Unfortunately, many people quit before they get started. The problem I see is that people make mental promises to themselves that they can't keep. They say they will pay $100 a month but it's too big a stretch. They can't do it and then they forget about it.

Think before you act: To avoid falling into that trap, take a hard look at your finances and determine how much you can realistically afford to pay each month. Track your spending every day for a month to get a firm handle on where your money is actually going.

Try these tips for saving $50 a month: Have movies and popcorn at home instead of going out. Use coupons for groceries and buy store brands.

-Make pizza at home instead of ordering out. Buy in bulk and freeze dinner entrees. Give handmade cards and gifts. Shop at consignment, thrift and discount stores.

-Pay more than the minimum. Once you start paying more than the minimum, the debts start to disappear.

Learn more about this author, Vin Stross.
Click here to send this author comments or questions.