Which Debts To Settle First

By Author: Nicholas Hunt
Total Articles: 434
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While living in this world it's incredibly easy to rack up debt quite quickly. With the pressure to keep up with those around you and the skyrocketing prices of goods and services it's no wonder that the average person carries an overwhelming amount of debt. What can be even more overwhelming is figuring out where to start when facing the pile of bills that lay before you.

Your first step in figuring out which debts to settle first, is to not take on any further debt. Your goal is to get out of debt, and until then you should steer clear from opening any new credit accounts, or racking up further purchases on your credit cards.

When looking at your debts you first need to decide which debts are linked to items that you cannot live without. These are debts that are linked to such things as cars or homes. No matter what road you choose to take to get out of debt, you need to make sure that you can pay your monthly payments in full on these two things.

Next, look at making payments on any other items that you own on credit that can be repossessed. Some examples of these would be a boat, RV, or motor home. ...
... If you cannot afford to pay on these items and still work towards getting out of debt, then you should probably look at selling them.

Now that you have the necessities covered, line up your debts in order from least amount owed to your highest balance. Find out what the minimum balance is on each of your accounts and make sure that you assign at least that amount to each debt. Whatever money is left over put towards your account that you owe the least on. Keep paying that extra money towards your lowest balance until you pay that account completely off. Once that account is paid off take the money that you were paying on that debt and apply it to your next lowest account. Continue that process until all your debts have been paid off.

It is extremely important that you continue to pay at least the minimum amount on each of your accounts to keep yourself from getting late payments reported on your credit report. As long as you keep paying off each debt, and applying the monthly payments of paid off debts to your remaining open accounts, you will be out of debt in no time.

About the author: Nicholas writes for http://www.debtnation.co.uk/ where you can find advice on dealing with credit card debts at http://www.debtnation.co.uk/pay-down-credit-cards.html