Focus on One Bill at a Time

Take a look at all your bills, credit cards and loans.  Divide your balance by your monthly payment.  Focus on paying off the bill with the months to payoff ratio.  If you focus on paying off one bill at a time using this method, you will free up monthly cash flow quicker to payoff your other bills. For example:

Credit card #1 – balance $4,000/payment $350 = 11.43 months

Credit card #2 – balance $2500/payment $100 = 25 months

If you payoff credit card #1 first, you will free up $350 per month to add to credit card 2

New credit card #2 – balance $2500/payment $100 + $350=$450 = 5.56 months

Of course, this doesn’t take into account interest and amounts paid on credit card 2 while paying off credit card one, but you can see the point.

7-Cash or Credit?

Should you pay with cash or credit?  If you can keep track of your spending and payoff your credit card at the end of each month, you may be leaving money on the table if you use cash to pay for purchases.  Many credit cards offer cash back or rewards for using their cards.  Upromise offers up to 5% cash back and additional amounts for online shopping if you use their credit card.  Discover also offers a cash back option.  If you are not disciplined enough to track your spending and payoff your card each month, the interest rates are high on these cards and you will lose your cash back savings to interest paid.