[Leslie]

I am looking for advice on the most effective strategies for paying off debt.

What methods have worked best for you?

Have you found success with specific plans like the debt snowball or avalanche methods, consolidating loans, or seeking professional financial counseling?

How do you balance paying off debt with saving for the future?

Are there any common pitfalls to avoid or tips you wish you had known earlier in your journey to becoming debt-free?

Your insights and personal experiences would be greatly appreciated!

[Dion]

Step one.

Stop making more bad debt.

Step two. Split debt into three categories
Good debt.

Bad debt.

Worse debt.

Create good debt by house hacking.

Focus worse debt along with creating good debt.

(Worse debt has an adjustable rate, loan re-evaluation period, balloon payment or interest rate two times higher than the other bad debt.

Then snowball the bad debt.

[Sandy]

Depends on your goal. Is it more important to lower the required monthly payments or pay the least amount of interest possible?

If it’s the former, snowball.

If it’s the latter then highest interest rate first.

[Steve]

Split between the highest rate and longest term with priority weighted by the rate difference.

I used to have a spreadsheet, but say you have $10k credit card debt at 20% and $100k mortgage at 5%, there’s a percentage you want to pay off the mortgage because it’ll save more interest off the back of the loan than you’ll pay extra in short term credit card debt.

[Rob]

Do what works for you? I don’t need emotional wins, only financial. If I had cards, pay tht highest first.

[Brian]

For me it has always been B unless one was really small and just annoying to keep making small payments.

No fee 0% balance transfers were a favorite tool when I could find them.

[Katie]

Snowball gives me the psychological oomph to get me excited and keep me in the game.

[Brian]

I would personally do the highest interest rate first to save every penny but I get the feeling good idea of snowball.

[Allen]

If you want to be in debt longer and pay more in interest, go snowball.

Otherwise, go with highest interest rate.

[Sayan]

Highest interest rate.

Why?

You pay the least amount of interest that way.

[Scott]

B is mathematically correct/fastest

A is more likely to happen phychologically

the $/time difference between A and B can be minimal depending on the type(s) and amounts of debt vs income and how fast you can pay it off

personally i would recommend A but with ridiculous intensity so it doesnt matter because its getting paid off yesterday

[Rodney]

Whatever works! Greatest cost reduction is B. Greater likelihood to continue the process is A.

[Tom]

Highest rate if you are are already motivated and financially literate.

Snowball works for people that are financially illiterate and need to check off small wins.

[Author]

Posts