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  1. There is an exception to this – if you have other debt from Credit Cards, higher interest student loans, or anything else with a higher rate than your mortgage; pay these first. You often need to call and tell the mortgage company to apply any extra money to the principal otherwise they will either add it to your escrow account (if your insurance and taxes are rolled into your mortgage) or just keep carrying the amount over to the next month – I never have understood how they justify this. So make sure you call before paying extra and make sure you have paid off all of your higher interest debt.

    Another good tip is calling credit card companies and asking about offers for balance transfers make sure you find out all of the terms and fees. You can also look for loans with lower interest rates so you can transfer your credit card balances to those. If you do this make sure you cut up all but one emergency card so you don’t get tempted to buy things you can’t pay for outright. DO NOT close the other accounts – your available credit lines positively affect your credit store. For instance owing 3,000 but having 10,000 available is better than owing 2000 and only having 4,000 in credit available. Also make sure you don’t have annual fees, charges for “security” or “credit protection” coverage which the law provides for anyway in most states. Take advantage of 0% offers as long as they last for at least 1 year and don’t change to a high interest rate later or expect you to pay interest retroactively for the 0% period . This often happens with furniture store or electronic store offers.

  2. Stephanie is definitely right – tackle those high interest loans first!

    You have to be careful keeping credit open – especially if you have abused it in the past. It is better to have a little lower credit rating because you closed accounts than to have a LOT lower credit rating because you run up your bills and can’t pay.

    Like everything in life, there has to be discipline.

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