February 23, 2007, Newsletter Issue #53: About Push Payment Plans
Tip of the Week
A push payment plan is one designed to pay off high interest bills first. While a push payment plan doesn't necessarily reap the emotional reward of a debt payment plan that pays off the smallest bills first, it is far and away the smartest way to pay off debts from a financial perspective.
Let's say you have a couple of department store credit cards, a Visa bill, and a student loan you are paying off. Your total debt is $12,375 and you're paying an extra $50 on each above the required minimum payment. Instead of paying $50 extra on each bill, take the $150 from three of the debts and apply it to the debt with the highest rate. Pay that off, and move on to the debt with the next highest interest rate, and so on until all the debts are paid off. In the end, you'll save nearly $750 in interest and you'll pay off your debts faster because less interest is adding up.
To figure out your own push payment plan, download Debt Analyzer for free at DebtAnalyzer.com. The program has been used successfully by certified credit counselors for years.
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