2torial #0692:
Learn2 Get Out of Debt (continued)

Prioritize your debts

One good thing about debt management is that it's not rocket science. The bottom line is that you want to pay off the most expensive loans first. Once you've listed all of your debts, you can clearly see which ones cost the most. Which loans have the highest interest rate? Are there other fees in the fine print? For example, many credit cards with low interest rates have high annual fees or rates that go up after one year.

List your debts again, this time in the order you need to pay them. Put the bills you absolutely have to pay first, like your rent and telephone bill, at the top of the list. Next should be loans and credit cards with the highest interest rates. Put low-interest loans (such as student loans) at the end of your list.

Note: Although many people are hesitant to give up their savings, the best thing you can do for yourself financially is pay off your debts immediately. Unless you have an incredibly low interest rate on your loan or credit cards and have invested your savings in some high-yield avenues, the money you'll make from the interest on your savings will be less than the money you're losing in debt. Although you should set some money aside for emergencies (discussed later), it's ultimately a far better idea to pay off your credit than to squirrel your money into an account that won't be immediately beneficial.