Financial Independence Debt Solutions – Part 5

January 19th, 2008 | Stacey | Debt Management, Financial Freedom, Financial Independence

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We have discussed financial independence and practical debt solutions to eliminate high interest bills and improve your credit for better financial standing. By getting rid of debt and developing a positive perspective about money, you can create a realistic budget and finally reach financial freedom.

The last part of our series will discuss the debate of which credit cards to pay off first. While many financial experts recommend that you pay off the cards with the highest interest rates because it is the most expensive debt you are carrying, other financial experts feel you should pay off credit cards with balances closest to the credit limits first. The reason for this is because 30 percent of your credit score is determined by how much credit you are using. The lower your balances are in relation to the credit limits on your accounts, the higher your credit score will be. You should always try to use just 50 percent of your available credit to remain in good standing and boost your credit score.

Once you pay down your balances to 50 percent of your credit limit, you can then pay off the high interest credit cards first. By tackling your credit card debt in this manner, you will pay down your bills and improve your credit score at the same time.

By applying the practical debt solutions presented in our mini series about financial independence, you can become debt free and enjoy greater financial freedom in the future.