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Learning, Sharing, and Teaching => Ask a Mustachian => Topic started by: justjenn on July 20, 2015, 06:57:00 PM

Title: Which debt should I pay off first?
Post by: justjenn on July 20, 2015, 06:57:00 PM

Hey everyone,

I just got married and graduated from college, and Iʻm still trying to get a handle on my finances. DH and I have quite a bit of debt between us, and Iʻm trying to focus on paying them down. Right now Iʻm trying to decide which one to demolish first, and I narrowed it down to two possibilities. I wanted your guysʻ opinion on which one to pay off first.

Option 1: Student loan. app. $4400 @ 6.8% interest. Monthly payment: $83
Option 2: Car loan. app $8500 @ 5% interest. Monthly payment: $300

I canʻt decide between paying off the higher interest loan or clearing up some monthly money in order to get a debt snowball going.

Any advice would be awesome!

Title: Re: Which debt should I pay off first?
Post by: Murse on July 20, 2015, 07:02:32 PM

Trick question? Highest interest.

Title: Re: Which debt should I pay off first?
Post by: Cessna152 on July 20, 2015, 07:04:07 PM

Highest interest always. Plus since that's your smaller amount, it'll be a quick victory to set your sights on the next one.

Title: Re: Which debt should I pay off first?
Post by: MDM on July 20, 2015, 07:09:44 PM

You could download the spreadsheet from http://www.vertex42.com/Calculators/debt-reduction-calculator.html and see how much the different options would cost/save you.

Title: Re: Which debt should I pay off first?
Post by: justjenn on July 20, 2015, 07:20:16 PM

thanks everyone! Iʻm determined to pay off that SL as fast as possible. Itʻs so close to being done, itʻs been driving me crazy.