Yesterday I left you on a cliff hanger!

And that was to take 10%…that last 10% of your income…and to apply that additionally toward your debt.

People ask me all the time, “Nate…how do I go about that? What debt do I pay off first? How do I start on the road to decreasing my debt?”

I’ve heard 3 different systems, and you can just pick the one that works best for you.

  1. Some people teach that you should start with the lowest debt. Whatever that smallest bill is…maybe a credit card…and you would you would pay that off with that extra 10% applying toward it each month. And then once it’s paid off, you would take all the amount that you’ve been paying toward that small debt and pay it toward the next debt.
  2. Other people teach to pay off your debt according to what the interest rate is. So if you have a bill that’s on a high interest rate…it may not be your smallest debt (maybe it’s your 2nd or 3rd smallest debt)… but if it has a high interest rate, you would pay that off first, and then go on to the next credit card, or whatever the loan is, that has the next highest percentage of interest attached to it.
  3. I read something recently where some one said to pay off the most emotional debt first. If there’s one debt that you’re just really frustrated about or angry with, that you wish you didn’t have… Just for peace of mind, pay of that debt first!

It doesn’t matter to me which way you do it, just get started paying off that debt!

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