Prioritizing Your Debt

I have often read and heard from financial experts about paying down debts from lowest balance to highest, obviously paying at least minimum on all of them. This “snowball” effect, as it is commonly termed, makes sense. However, this is just a psychological benefit. It’s a “win” to pay off a quick low balance to continue on with paying the next.

It’s refreshing to hear, however, the other choice: to pay down debts from highest APR to lowest, again paying at least minimum on all of them. It makes sense to choose a choice that mathematically makes more sense.

The way I see it, you’re either motivated to pay off your debt or you’re not. Why pay more in the snowball method to psychologically feel a win? If you do the math there, the psychology doesn’t add up quite right–but I get it.

I’ve paid for my schooling out-of-pocket my entire life, through undergrad and my first three years of grad school; and I am quite proud of this hard work in doing so. My final two years of grad school created some debt, but not comparatively to those I hear from other students. School debt is definitely a problem, but it’s too important to equally stay engaged in learning how to get a handle on it, and from various perspectives.


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2 thoughts on “Prioritizing Your Debt

  1. I agree with you when you say, “The way I see it, you’re either motivated to pay off your debt or you’re not.”
    If one is truly gazelle intense about paying off debt it will not matter what order the debt is paid. You will pay it off so fast that you will avoid more interest then originally calculated using the debt snowball or debt avalanche.
    When I compared the difference between the debt snowball & debt avalanche for my situation I found that the debt avalanche allowed me to avoid less than $1000. My commitment and intensity made is possible to avoid of $20K and pay the 30 year debts off in 5.5 years.

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  2. “My commitment and intensity made is possible to avoid of $20K and pay the 30 year debts off in 5.5 years.” –That’s awesome @Lady A. Thank you for sharing your insights, and congrats on paying off your debt! It’s inspiring to hear that.

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