Just a question, I've heard with debt it's best to pay off the ones with the higher interest rates first.
I was going to do that but, now I'm wondering if I should pay off the two lower debts first?
We have 4 areas of some debt.
These are the interest rates on them:
12.50%
7.90%
7.74%
4%

The 12.50% one I'm going to focus on first because it's the highest interest rate and it's actually our 2nd to lowest debt.
I'm wondering if I should try and focus on the one that is 4% after that because that is actually our lowest debt. It wouldn't take as long to pay off as others, and with those two debts gone we'd have $321 more to put to the next debt we worked on getting paid off.

Does any of that make sense?

Yes, you make sense.
I would go with your plan to pay off the 12.50% first for sure.

But it would matter to me what kind of debts the rest were and how much they were before I moved on from there. B/c really you should go with the 7.9 next then the 7.74, then the 4 last since it's the lowest interest rate so I guess it would matter to me how little amount the 4% was compared to the 7.9% and how much longer the 7.9 would take to pay off.

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A woman is like a teabag. You never know how strong she is until she gets into hot water.-Eleanor Roosevelt

We've been paying off our debts in the order of lowest debt to highest. I've done the calculations on both and there really isn't much difference in the amount of time for payoff (in our case anyway). For me it's the "thrill" of paying of each debt that keeps me motivated.

Personally I think you should do whatever keeps you motivated to pay off debt. If it motivates you to pay off high interest rates then do that, there is no right or wrong way when paying off debt. You need to do what works best for you.

12.50%- Loan
7.90%- CC
7.74%- Car
4%- Military

Military is about $5,000 less than the CC. Give or take a little. Yeah... there's a lot on the CC. Can thank my Dh for that one.

I like the psychological pleasure of paying off low balance debts, whenever the interest rate is above zero. I also like paying off psychologically annoying debts first, for instance, debts to family members.

Keep chipping away at those high balance debts, too. Sometimes it begins to feel like those are so big they will never get paid off so they don't matter. BTW, you've got really good interest rates.

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When it comes to paying off debt ~ I am a firm believer that it really doesn't matter what comes first as long as you are paying it off & you are happy seeing it get paid off. It has been said that when paying things off, you should go with the cc before like a car loan ~ but in my case, the car loan is going to give me the most $$ back into my budget when it is gone, so that is my priority. You just have to do what works best for your family.

Good Luck!

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We have done both in the past, but we have made the most progress without any backsliding using the debt "snowball" method where you pay off smallest to largest regardless of interest rate. I think it has worked for us because of the more instant gratification and psychological boost of being able to cross off debts in our list. There's just something happy about having fewer debts in the stack and making each milestone sooner.

I know the math says pay off the higher interest rate first but like Ramsey says, if we were so very good at math we wouldn't be in debt in the first place!

She beat me to what I was going to say. Pay off the 12% first and then the one you can pay off first next just to make you feel like you are getting somewhere and you don't get discouraged. By the way while you are doing this don't forget to start a savings account so you don't fall back into the cc trap again.

Good luck it will be hard but well worth it.

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I've heard it advised both ways and we've done it both ways. Personally for us, paying off the lower debt 1st has worked for us b/c it kept us motivated (obviously not motivated enough b/c we built some debt back up ) But I think you should do whatever will keep you motivated. Good luck!

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