Dead On Last Payment method:
1. Make a list of the current outstanding balances on each of your credit card accounts.
2. Divide each balance by the minimum payment that particular card company wants you to make. The result is that account’s DOLP number.
For example, say your outstanding Visa balance is $500 and the minimum payment due is $50. Dividing the total debt ($500) by the minimum payment ($50) gives you a DOLP number of 10.
3. Once you’ve figured out the DOLP number for each account, rank them in reverse order, putting the account with the lowest number first, the one with the second-lowest number second, and so on.
You now know the most efficient order in which you should pay off your various credit card balances.
4. Pay as much as you can each month toward the card with the lowest DOLP number. For each of your other cards, make only the minimum payment.
5. Once a card is paid off, cut it up — but don’t close the account! Leave the account open so you have credit you aren’t using, which will help improve your credit score.
Now move the next card up on your list and repeat the process until all your cards are paid off.
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Don’t ask me anything. Please read David Bach’s full article in Yahoo! Finance or find his book, The Finish Rich Workbook: Creating a Personalized Plan for a Richer Future (Get out of debt, Put your dreams in action and achieve Financial Freedom)
10 Comments
Memang baguslah artikel ni..
yg no. 5 tu ade myuskil sket…
Bagus2..! Two thumbs Up!! Memudahkan perkara yg susah adalah the best talent you will ever have… and with that you can make a wonder!
gi emel kat penulis tu
apa yang musykilnya kumb@ng.. simple je ayat tu
kalau dah paid off…tutup aje la kad tu…tu pendapat aku lah…
Interesting and practical advise.
This is basically the same process I recommend. I would add that you should call your credit card companies and ask for a better rate. The worst that will happen is they say no, but if you can negotiate a lower interest rate, you can get the cards paid off even faster using DOLP.
My strategy was paying minimum for credit cards with less interests and prioritize most payments for cards with highest interests, charges and fees. The key is to allocate dedicated amount of montly payment out of your paycheck.
Your Tip #5 is very important one that so many people forget. They are so happy to have a credit card paid off, they think they should cancel it. Like you said, usually this is not a good idea because otherwise it won’t be reported anymore to the credit bureaus and can then hurt your FICO score.
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