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Don't Play Stupid Games

The easiest person you can fool, as they say, is yourself.Here are some of the stupid games people play with debt: (a) consolidate debt, (c) open new "low interest" credit card to pay other credit cards, and (c) get long-term car loan.

If you don't want to win stupid prizes, don't play these stupid games. Treat debt as an emergency and and go full-tilt to get rid of it. Either choose high interest loans first, or the smallest ones first, and systematically pay off all your debt.

There are only two types of debt I'm comfortable with: (a) a house with a fixed 15 year mortgage with 40% downpayment, and (b) a low-limit credit card that you'll use only to pay monthly utilities (automate monthly utility billing online, and schedule monthly full payment on the credit card from your bank account). The latter is a dangerous tool, so treat it with respect. It's true that it will help you build your credit history, but carried over credit card debt is high interest and will destroy your long-term net worth. Don't carry it for shopping or any discretionary purchases — use cash or debit card instead.

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