Which debts to pay off first?

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asked Nov 6, 2023 in Other-Finance by SaraRumb (1,580 points)
Which debts to pay off first?

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answered 1 day ago by Crazytoaster (40,770 points)
The debts that you should pay off first are debts you have that have the highest interest rates.

When paying off debts you should focus on paying off debts such as credit card debt or any other debt which has highest interest.

The longer you leave these debts with higher interest such as credit card debt the faster they will accrue more interest which can make it harder to get the debt paid off.

Pay more than the minimum amount on the credit cards and debts with highest interest as paying only the minimum mainly pays the interest amount and you may never get the debt paid off as more and more interest will start to be added.

When paying off debt it's best to use the debt avalanche method which involves paying off any highest interest debt first.

When using the debt avalanche method to pay off debt you will make the minimum monthly payment on every lower interest card or loan you have and pay more than the minimum monthly payment on debt with the highest interest rates.

Then you'll put any extra money you have toward paying down that balance as much as possible.

When paying off loans your best bet would be to decrease your debt spend as quickly as possible to create higher margins between your income and expenses.

Pay off the smallest balance of the loan first and then put that monthly payment toward the next smallest, so on and so forth.

When paying off debt you'll save more money on interest with the avalanche method, but using the snowball method for paying off debt can also be emotionally satisfying as you clear away smaller, lingering debts first.

It might even help you if you're trying to qualify for a mortgage, as it reduces your monthly debt load.

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