Whether it’s student loans, credit card debt, car loans or any other type of debt, you should aggressively pay off your debt.
There are two main ways to go about paying off your debt.
- Pay off accounts that have the highest interest rate first.
- Pay off accounts that have the lowest balance first.
The first method is more practical because you will pay a lower amount of interest because you’re paying off debt with higher interest rates first.
However, the second method has more of a psychological effect as you are likely to be more motivated as you pay off your smaller accounts first.
I really like both methods and you can’t go wrong, it’s really up to personal preference and whether you’re motivated by seeing smaller accounts being fully paid off or more motivated by paying the least amount of interest total.
Sign up here to get the 10 Steps to Financial Independence sent directly to your email.
I hate spam. You will not get any from me.