Like many other Tennesseans who have a lot of widespread debt, you may feel overwhelmed by it and deciding which accounts to pay off first can be difficult. However, according to Credit.com there are strategies that you can employ to save yourself money in interest and get your debts paid off quicker.
One school of thought advocates paying off your higher interest debts first. For most people, this will be their credit cards but other types of loans can also have interest rates in the double digits. If you only pay the minimum amount on your credit card bill every month, not only will it take you a long time to pay off your outstanding balance but you will pay an exorbitant amount of interest over time. Tackling your high interest debt first is a savvy move if your goal is to save money over the long run and stop your debt from growing.
If you are someone who prefers to see results right away, however, you may be better off paying your smaller debts first. The sense of satisfaction you will get from eliminating even a balance of a few hundred dollars may be worth it, if it will motivate you to keep working toward your long term goal of debt reduction.
Finally, some experts recommend tackling your secured debts such as your mortgage or auto loan as a first priority. Secured debts are ones where the creditor can seize your assets like your home or your car if you default. While the interest payments on these types of loan are typically lower, the stakes for blowing them off are much higher as losing your house or your way to get to work can have serious consequences on your life.