Today’s the day. You’ve decided to take the bull by the horns and begin earnestly to pay off your credit cards and other debt. Good for you! Now that you’re committed to getting out of hock you’ve got two great options for doing it. We’ll talk about that first today and which might be better for you. Then it’s on to your calls at 800-525-7000. Rob explains the snowball method and the avalanche method of paying down debt and how to choose which one is best for you and which will save you the most money. The snowball method of debt reduction is probably the better known of the two. Here’s how it works: First, you pay the minimum monthly payment on all of your debts. Then you apply any leftover money to the debt with the smallest balance. This would be extra money put on your smallest debt, so it gets paid off first. Then, once that debt is paid off, you take its monthly minimum payment and the extra you were sending and add that to your next smallest debt. When that’s paid off, you put all of that money on the next smallest, and so on, until all debt is gone. Withthe avalanche method, you make the mandatory minimum payments on all your debts. But instead of taking your leftover money and applying it to your smallest balance, you put it on the debt with the highest interest rate. When that’s paid off you apply its payment and the leftover to the next highest interest rate and so on. So, which is better? That depends on you. Do you need to see the progress you’re making? If so, you want the snowball method because the results are more immediate and tangible. But some people think more in the abstract and they’re content with watching the numbers and seeing the balances go down each month. They don’t mind if it takes longer to get a win they want to make sure they pay the least amount of interest overall. And the avalanche approach gives you that. Whichever method you choose, let us know how it’s going. We’d love to hear from you. On today’s program we also answer a couple of your questions: My current job doesn’t have a 401K. Someone suggested I put my money in an annuity. I will be retiring in a few years. Should I take money out of my annuity and pay off my mortgage? How and where do I start with investing? I only have 100K in my 401K. I have a 99K mortgage and a credit card for 11K. Should I use my retirement to pay down my mortgage?