Highest Interest First

For The Very Disciplined

There is a school of though promoted out there that, when one exams it for the long-term effects, is an extremely good program. It makes sense because you will save money by paying less to eliminate you debt by paying the debts that have the highest interest rate first, thereby immediately lowering the interest in dollars by paying the highest percentage interest debts first. This is promoted by John Cummuta and if you are a highly disciplined individual, you will find that this is an excellent program. Unlike last time when we discussed paying the lowest balance first and building on that success to build momentum to pay off the next-lowest bill, that plan advocates the strength in conditioning and has rewards of seeing you credit card debt eliminated chunk by noticable chunk. In the short term, you see success happen fairly rapidly. In the long term, you may have paid more interest (money) to see this success.

Let's face it: if you were extremely disciplined, you probably would not be in the hunt for credit card debt elimination. This plan has you analyze all of your debt (not just your credit card debt) and rank them by interest rates. The theory goes that if you spend every extra dollar eliminating the highest interest first, you will pay less in interest because that balance diminishes more quickly. From a strictly analytical view, this plan does eliminate your debt well. While you may not pay off the credit card with the lowest balance first, you may pay it off before the highest interest credit card is paid off, but then you will have more money each month available to pay down that higher interest.

Next, we will examine consolidation. Visit my website for more information.