Financial Literacy Month – Tip #20

Grab the worksheet that you created yesterday with the list of all credit card and loan accounts. Choose one account to focus on paying off at a time. Let’s say you have three credit card accounts, choose either the account with the highest interest rate or the smallest balance to get the momentum started. For example, using the list below:

Card / LoanBalanceInterestRate%Minimum PaymentActual Payment
Macy’s$1,50025.74%$60$70
Chase Visa$6,50018.24%$260$280
Best Buy$1,50025.24%$60$90

Macy’s would be the account to focus on first (highest interest rate, lowest balance). Make the minimum payment to Chase and Best Buy and pay the minimum plus as much extra as possible to Macy’s.

Paying off one account at a time will get the momentum started! Tomorrow we will dig into how to create the snowball effect.

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