Fitting The Counselor In

Kerry and her husband are with a credit counseling service, and are torn about where to apply some excess money.

QUESTION: Kerry and her husband decided to sell her car because of mechanical problems. They are using one car now that has payments. They are working the debt snowball and are in a credit card counseling service. Where should they apply that money from the sale to?

ANSWER: Apply the money to the smallest debt. I would take your smallest debt at the counseling service and pay it off … they’ll adjust. Then you keep paying them the same amount, and they’ll adjust and send more to the others. There’s a temptation to finish the car loan off and then go after the credit counseling debt, and it would be all right to do that if you wanted. There’s not a bad way to get out of debt, but I just want you to see and feel the progress that you’re making.