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Debt
Getting out of debt
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Which method will eliminate your credit card debt sooner?

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The right answer is the High-Rate Method, which tackles higher debt first and will pay it down faster.

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Which kind of debt should you tackle first?

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Always tackle secured debt first, because if you miss payments on secured loans, you can wind up losing whatever's secured—such as your house or your car.

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Key Takeaways

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Almost everyone carries some credit card debt, and not all debt is bad. But it’s easy to wind up with more debt than you can handle. Fortunately, there are ways of reducing credit card debt and getting your head back above water.

  • Start by getting organized—find out what your debts are, and the interest rate on each one
  • Consider two methods of paying debts: the High-Rate Method and the Snowball Method
  • Make a budget so you know you’re not adding to your debt with impulse purchases and unnecessary expenses
  • Pay more than just the minimum on your credit card whenever you can
  • Consider negotiating with your creditors if you have debts you’re struggling to pay
  • When deciding whether to pay down debt or save money, consider the interest rates on your debts as well as your savings goals. Some debt, like credit card debt, should be paid as soon as possible, but in some cases it can be okay to carry manageable debt and save at the same time