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Reply to "Make $200k, credit card debt, no savings "
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[quote=Anonymous][quote=Anonymous][quote]4) Once you have the little emergency fund, Pay the minimums on everything until you pay off the IRS. That is the priority debt. [/quote] Genuine question: why would you pay the IRS before credit cards? The interest rate is likely lower, and the IRS does not report to credit bureaus (and, thus, tax debt does not reduce one's credit score as long as it is being paid as agreed). As long as OP is paying the IRS as agreed, logic would dictate paying credit cards first. [quote]5) List your debts from smallest to largest in dollar amount. Pay min on all debts but the smallest. Attack that one. [/quote] This also makes no sense. I could maybe see doint it for very small amounts (say, $500), but, otherwise, OP should pay down the highest-interest-rate debt first (likely the credit card(s)).[/quote] Paying off small debts first can be a good strategy, too. It helps psychologically and can get the snowball going. [/quote]
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