Andre and Phil talk about how to pay down your debt.
Phil recommends paying off credit cards in the following order
- Credit cards with annual fees
- Credit card with highest interest rate next
- And finally, credit cards with lower balances
Andre recommends paying off credit cards using the snowball method
- Paying off store credit cards first (Circuit City, Best Buy, etc…)
- Paying off the lowest balance card next
- Finally, the largest credit card balance
Phil and Andre both agree that the next thing you should tackle are loans on depreciating assets, like a car payment.
Work on student loan debt, as it can’t be discharged in bankruptcy, but when possible pay off debt that is tax deductible last.
Paying off debt has a snowball effect, you’ll save enough money for a vacation or a down payment.
Phil recommends reading The Millionaire Next Door
Is a fancy car worth the payment? Figure out what’s the most important one thing in your life that will have long-term value, and spend money towards that while building savings.