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Posted in Paying Your Bills
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Question By
adolfoorozco11

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improving my spending habbit
i have student loans to pay,payday loans, and child support debts that are bringing my credit score down. i make minimum wage and I'm in a hole that i dont know where to begin. Where should i begin? i guess what i'm asking is what do i pay off first?

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How to pay off debt

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I found it better to pay  the loan with the lowest balance, NOT the highest interest rate.Yes, you want to get rid of those high rates,  but pay off the low balance card first and then apply that payment to the next lowest balance next. Before you know it, you  are making progress.

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Continue to make on time payments

You should continue to make on time payments to all your accounts as 'Payment History' is ~35% of your score. Make the minium payment at least to all accounts. After that is done you should start paying off the highest interest accounts off first which are most likely the 'Payday Loans'. Avoid at all cost getting into that trap again with the Payday Loans.

It may take some time but repeat this process monthly (or even weekly or biweekly) until you have all your debt paid off. You should also avoid using your credit cards until your caught up. Do not close your credit accounts, your credit cards, as your 'Credit Age' (average age of accounts, oldest account, etc) makes up about ~10% of your score. Or at the very least don't close them all and keep your best cards open that have no or a low annual fee and interest rate. You will want to consider the age of the card in your descion to possibly close any accounts. Once the account is closed it no longer is a factor in the average age of accounts.

I disagree with going to a Debt Mangement program - if your unable to make all the minium payments to your accounts then contact your creditors and ask for payment arrangements so that your credit score suffers less.

Try to reduce your monthly expenses and cut out some of the stuff you can go without for a while so you get out sooner than later.

Stay current with your child support - its simply the right thing to do. Your child deserves your support. Keep working hard, avoilding adding to your debt and your be fine. Hopefully you learn a life lesson here and don't over extend yourself again in the future.

Your credit score will continue to increase as you continue making on time payments to all your accounts.

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PAYDAY LOAN

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PAY the PAYDAY loan first! No contest! Put the rest of the debt in a debt management program. Cut up all your credit cards and STOP using them!

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