As we’ve discussed often, debt can feel so overwhelming. If you owe money to multiple lenders, the situations gets even trickier. You only have so much money to use each month. Should you focus on one bill or multiple minimum payments? What’s the best way to get the debt down?
Always Make Your Minimum Payments
One of the most important things that you can do to maintain good credit is make sure that you always make your minimum payments on time. It’s not always easy. Sometimes it requires juggling things a bit. But late payments are always a ding on your credit report. You don’t want your interest rate to go up. Therefore, when it comes to whether to focus on one bill or multiple minimum payments, make sure that you get those minimum payments satisfied.
Tip: If you get paid more than once per month, then you might find it easier to make your minimum payments if you change your due dates. Most credit card companies and other lenders will allow you to select your due date.
When to Focus on One Bill
After you’ve made your minimum payments for the month, do you have any money left over? If so, you should use that to pay down your debt. After all, the quicker you pay it off, the sooner the stress will be off your shoulders! Once the minimum payments are made, it’s good to focus on one bill at a time.
Sure, you could choose to divide your money across multiple accounts. However, that often makes it feel like you’re not getting anywhere with your debt. You don’t see the big successes that help you stay on track.
Which Bill to Focus On?
When you’re ready to focus on one bill to pay off, which one should it be? It’s entirely up to you. There are two common choices:
- The bill with the highest interest rate
- The bill with the lowest amount due
If you want to be financially savvy, then you are wise to pay off the bill with the highest interest rate first. After all, you’re spending more each month on interest than you need to. Therefore, the sooner you pay it, the better off you’ll be financially.
However, some people find that paying off the bill with the lowest amount due, regardless of interest rate, helps jump-start their good debt repayment habits. If you only owe a few hundred on one of your credit cards, then pay that off first. It will be a relief not to have that hanging over your head anymore.
If you’re wondering whether to focus on one bill or multiple minimum payments then the answer is the latter. Pay off those minimum payments first. However, with any additional money, you should focus on paying off one bill at a time. Which bill you choose depends on your money personality. Either way, paying off that one bill at a time will give you the feeling of achievement and success that keeps you motivated to get control of your debt once and for all.
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Kathryn Vercillo is a professional writer with more than a decade of experience writing about healthy living and personal finance. She lives in San Francisco, where she has learned to maximize frugal living tips in order to thrive as a freelancer in one of the nation’s most expensive cities. When she’s not writing, she’s exploring the city on foot with her rescue dog. Learn more about her at www.kathrynvercillo.com. Kathryn also writes about saving money with coupons over at GroceryCouponGuide.com .