What is the best way to pay off debt? Higher interest first or lowest balance?

Hello Friends,

It's better to get rid of debt before saving or adding money to our emergency fund.
In general If the interest we pay is higher than the interest we earn.


Which debt we should pay off first Higher interest or lowest balance?

Quote:

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Originally Posted by Bhavya

Hello Friends,

It's better to get rid of debt before saving or adding money to our emergency fund.
In general If the interest we pay is higher than the interest we earn.


Which debt we should pay off first Higher interest or lowest balance?

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It depends on theses factors!

1. Make a list of all your debts and for each one write down the balance, the minimum payment, the payment frequency (bi-weekly, monthly etc.) and the interest rate.
2. Determine how much extra you have to throw at your debt each month.
3. Build momentum by adding payments on any paid off debts towards the next debt in line.

Quote:

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Originally Posted by Moana

It depends on theses factors!

1. Make a list of all your debts and for each one write down the balance, the minimum payment, the payment frequency (bi-weekly, monthly etc.) and the interest rate.
2. Determine how much extra you have to throw at your debt each month.

1. Build momentum by adding payments on any paid off debts towards the next debt in line.

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Thanks for this explanation Moana, It's really helpful.