Dave Ramsey: Before or after?

Dear Dave,

I’ve started following your plan, and I’ve got a beginner emergency fund of $1,000 saved. Now that I’m ready to start paying off debt in Baby Step 2, do you recommend paying off credit card balances before or after closing the accounts?

Maeve

Dear Maeve,

Remember, you don’t build wealth or save money by using credit cards. And you’re naïve if you think you’re going to play around with a multi-billion-dollar industry and beat them at their own game. The only way to win against credit card companies is by refusing to play around with them.

Dave

Paying extra

Dear Dave,

I’d like to start paying a little extra each month on my car loan, so I can get out of debt faster. Would it be a good idea to write a separate check for this extra amount?

Steve

Dear Steve,

Some companies use payment booklets that have a box specifically for entering any amount you want applied directly to the principal. See if this is available to you, as well. Regardless, make sure you keep an accurate, written record of the monthly and overall amounts you’re designating as "principal only."

Great question, Steve.

Dave

Dave Ramsey is CEO of Ramsey Solutions. He has authored seven best-selling books, including "The Total Money Makeover." "The Dave Ramsey Show" is heard by more than 14 million listeners each week on 600 radio stations and multiple digital platforms. Follow Dave on the web at daveramsey.com and on Twitter at @DaveRamsey.