Steve Rohde
Gannett News Service

Question: My husband and I have racked up $35,000 in debt from credit cards and loans we have taken out to pay off higher-rate cards. Now we're left with six different bills, all with about the same finance charge but varying balances.

To which one do we dedicate extra money in order to pay it off first and get out of debt the quickest? I have heard three different ways: 1) the one with the highest monthly payment; 2) the one with the lowest balance; 3) the one with the highest balance. What's the answer?

Answer: To get out of debt the fastest and save the most money, we usually suggest that people pay the balance with the highest interest rate first.

But deciding how to pay off debts is a personal choice, and since your interest rates are about the same, you'll probably enjoy getting out of debt by paying off the bill with the lowest balance. That way you'll quickly have fewer bills to deal with each month.

Pay as much as you can each month toward that card until it's paid off, then move on to the next one, and so on. You'll get further, faster by focusing your extra efforts on one card at a time.

Q: I lived with my father in their home after my parents' divorce. We later moved to a new address, and I put the cable bill in my name.

The company never told me that I would be required to assume his outstanding bill of $350; they just transferred his balance to mine because he lived there. I tried to resolve this and got nowhere.

He no longer lives with me and I'm stuck with his bill. They have turned off the cable and are sending the bill to collections, which will negatively affect my credit! What do I do?

A: Unless you signed something to the contrary, it does not appear that you should be liable for a bill you did not incur and for which you were not responsible. Contact the consumer protection or attorney general's office in your state (look in the local government pages of your telephone book) for assistance.

Another alternative would be to pay an attorney to write a letter on your behalf. If your account has been turned over to collections, you can dispute the bill with the collection agency. After you clear this up, check your credit reportYou can get a consolidated copy of your credit report online at Myvesta.org.

Tip: Don't fall into the trap of falling behind on your bills for a while, then making a large payment to "make up for it." Your credit report will reflect late payments for seven years.

Personal finance resources on debt

Mounting personal debt puts ever-increasing pressure on household finances and could possibly damage an individual's credit rating for the long term.

Negotiating a solution to mounting debt is not always easy. But it can be done, often through a careful debt consolidation program. A number of Web sites provide insights on how to manage and consolidate debt. Here's just a few:

• DebtSmart

Contains articles devoted to sorting out debt issues in dozens of categories.

• DebtWizards.com

Details on debt consolidation loans and consolidation services.

• SmartMoney.com

Offers wide range of debt management tools and information.

• YourCredit.com

Features articles on fixing credit, bankruptcy and debt consolidation.

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Send questions or comments to questions@SteveRhode.com. Steve Rhode is a money coach, president of Steve Rhode Inc. and co-founder of the nonprofit consumer education group www.Myvesta.org.