Prioritize accounts with interest rate fees

Now that you’ve reviewed your current monthly expenses, and broke them down into categories, you have a good overview of your monthly fixed expenses along with each withdrawal/due date for them. This article will focus on those monthly payments you’re making to credit cards companies and/or lenders as this is the next thing we’re trying to tackle, your debts! Don’t worry, soon we’ll be on the path to pay those pesky items away, but for now let’s revisit your credit card items & loans.

From the last exercise you should have your itemized list of monthly expenses. Let’s revisit your credit cards & loans (auto, student, etc.). Go back to your favorite money app that you signed up, or login to your credit card/loan website to see your remaining balance, along with your annual percentage rate (APR %). This will allow you to make a decision with regards to which balance you want to tackle first.

For my example, I went back to my itemized list and noted the 2 credit cards I had. After logging in to my credit card accounts, I noted both the remaining balance along with the current APR for both as seen below:


  • 1st Credit Card: Home Depot Credit card at 17.99% APR (Balance was $1,300)
  • 2nd Credit Card:  Capital One Venture at 22.3% APR (Balance was $2,100)

As you can see my Capital Visa card had the highest interest rate (22.3%) & balance ($2,100); therefore, I decided to tackle this one first.

There are two ways of tackling this:

  1. You can either pay off the one with the lowest balance, in my example the Office Depot credit card, and you can get that out of the way. This is more of a psychological WIN since it will get the ball rolling and you can continue with the rest of your debts.
  2. Pay off the Card/Loan with the highest interest rate. This will save you more money on the long run since you’ll be able to pay it off in less time, thus reducing the amount of interest paid.

Choose one method but don’t spend too much time deciding on it. This should give you have an idea of how much money you owe to your creditors/lenders and how much interest you’re paying off during the lifetime of the loan.


Although this was a short lesson, the takeaway is for you to face the reality that you have some challenges ahead in the form of debt! As I mentioned earlier, it’s just a matter of time before we pay it all off and we’re on our way to make our money grow in the form of investments! For now take this content one step at a time, that’s why I’m breaking these concepts into short articles so that it may give you time to process this information and allows you to make some time to understand what we’re trying to accomplish. Later on we’ll dive deep into how to pay off those loans faster by increasing our minimum payments.

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