Debt

Ask Jean Thursday: Paying it Down

Posted by Jean

Hi Jean, I just read your book, “Pay It Down!” I have $15,000 in credit card debt. I am dedicated to cutting some major things in my life to cut down this debt. My question is, when I save $10 where am I putting it? Do you want me to put it in some sort of savings account, a piggy bank, or a safe?

- Antonio, Pennsylvania

First off, congrats on taking the first steps towards paying down your debts. I think that with the information you’ll find in “Pay It Down!” and your dedication to cutting down on spending, you’re on the right track to financial freedom.

Let’s talk about where to put the $10 you’re saving every day. Ideally, you should be keeping it in a high-yielding savings or money market account. To find out which accounts have the best rates, visit Bankrate.com. There, you can search for the national or local banks with the best interest rates.

Once you think you’ve found the right account, do a little investigating. Start by reading the fine print. Do they charge extra fees? Do you have enough money to meet the minimum requirement for the initial deposit? Today, there are banks out there that require at least a $1,000 deposit to open a new account.

As you start to accumulate the money, you’re going to need to think about the way to best tackle your credit card debt. First, start by paying off your highest rate debts first—they’re the ones that are costing you the most. Lay your credit cards out on the table and make note of the interest rate you’re paying on each one. This will give you an idea of where you should be making your biggest effort.

Lastly, if you think you need a little more help in paying off your debts, I encourage you to take a look at my newest get-out-of-debt tool, Debt Diet Online. It’s a personalized program that uses behavior change science to guide you through your debt challenges. For more information on Debt Diet Online, click here.