Frugal Tip 16: Pay More Then Minimum

Recently I started posting a more in depth look at each of the frugal tips. Over the next few weeks I will publish the frugal tips that I have collected. Please note that not every tip will work for everyone. Chose as many of the tips that will work with you and your family and start implementing them. Today we will proceed with Tip #16 Pay more than the minimum on my debts. This is one of the best ways to pay off your debts. That is after you stop taking on any new debt. That is because as you pay more then the minimum you are reducing the principle even faster. Which means you have less interest being added to your debts. Of course you can't do this with every single debt so here is what you should do.
Prioritize your debts from smallest to largest. By doing the smallest debt first it gives you a little motivation to keep going. Pay the minimum on all your debts except that smallest debt. Pay as much extra as you can on that debt. Once it is paid off take the entire amount you were paying on that debt and apply it to what you are paying on the next smallest debt. Once that debt is paid off do the same thing again to the next debt until all of your debts are paid off. Dave Ramsey calls this the snowball effect.


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