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YOU ARE HERE > Home > Features > 7 Must Follow Steps to Getting Debt Free > Step 1 > Step 2 > Step 3

Features 7 Must Follow Steps to Getting Debt Free Step 1 Step 2 Step 3 Step 4 Step 5 Step 6 Step 7 A Bad Case of Affluenza Credit File Ode to a Debtor Payment Protection Insurance: Peace of Mind - Until You Make a Claim

7 Must Follow Steps to Getting Debt Free Step 3 - Prioritise Your Debts Now that you’ve got everything listed, you can work out which debt you plan to clear first. If you have limited money, then it makes sense to pay off the debt that is costing you the most - in interest rate terms that is. It may be your overdraft or that store card that spends more time hovering around the sales counter than it does in your purse. But whichever one has the highest interest rate is the one that has got to go. If you’ve got a load of credit cards, with loads of different rates then it may seem a bit confusing. That’s where "snowballing" comes in. Snowballing is the phrase to describe concentrating your spare money on your most expensive card whilst maintaining the minimum payments on the rest. You pay as much as you can afford each month off the most expensive card and get it cleared as quickly as possible. Once that one is paid off you move on to the next expensive. Keeping the momentum up, as the amount you are paying off your target credit card snowballs month after month. An Excel spreadsheet, designed for American credit card debtors, can be downloaded from http://www.geocities.com/schizeckinosy/snowball.html The point is, whichever card has the highest interest rate has got to go ... and as fast as you can get it gone. That’s why following step one, two and three is so important. Knowing what money you have and what your debts are costing you, you’re able to make sure that your repayments really count.   <<< Step 2 Step 4 >>>

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