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I'd like to offer an alternative perspective on the order of paying off accounts. While it's true that you will save on interest payments if you pay off the hig

by UrLicht 16y ago

I'd like to offer an alternative perspective on the order of paying off accounts. While it's true that you will save on interest payments if you pay off the higher-interest accounts first, if you really are hell-bent on paying off as much debt as you can as fast as possible, it won't amount to much of a savings. Couple that with the fact that large amounts of debt can be extremely daunting (and downright disheartening) I'd recommend paying off the accounts with the smallest balance first. The psychological reward you'll get from that is (at least it was in my case) enough to keep you going until you've paid all the accounts off. With the way the economy is going, I believe that those of us with debt will be the ones who suffer most, so make hay while the sun shines, so they say.

AgentConundrum 16y ago
I cheated on it a little bit. I sort of bounced between types of credit for a while. When I was in college, my grandfather cosigned for my line of credit, so when I was making enough money to allow it, I converted it into a standard loan to get his name off my debt. Not long after that - a few months, maybe - the bank called and said that I was such a good customer that they'd love to give me a brand new line of credit (with a $5k limit increase over the old one), and that they could consolidate my visa and loan debt onto the line of credit, which sounded like a great deal. So I did it, but I guess I missed out on the psychological reward you mentioned. My student loans (the 'OSAP' in my top post - Ontario Student Assistance Program) were just this thing I never paid attention to. They just draw $96 from me every month, and I don't care that they do. When I have the money to pay it off entirely, I will, but for now just getting them to accept > $96/mo is such a massive hassle that I don't bother. When my line of credit was paid off, the only "reward" I got from that was, "that's it?" I knew I still had that damn student loan, but there was little I could do about it for the reasons listed above. So I guess I just started living my life. Oh, and "paying off the highest interest first" and "paying off the smallest debt first" were the exact same thing for me, since my smallest debt was the credit card.

by UrLicht 16y ago

AgentConundrum 16y ago

I cheated on it a little bit. I sort of bounced between types of credit for a while. When I was in college, my grandfather cosigned for my line of credit, so when I was making enough money to allow it, I converted it into a standard loan to get his name off my debt. Not long after that - a few months, maybe - the bank called and said that I was such a good customer that they'd love to give me a brand new line of credit (with a $5k limit increase over the old one), and that they could consolidate my visa and loan debt onto the line of credit, which sounded like a great deal. So I did it, but I guess I missed out on the psychological reward you mentioned. My student loans (the 'OSAP' in my top post - Ontario Student Assistance Program) were just this thing I never paid attention to. They just draw $96 from me every month, and I don't care that they do. When I have the money to pay it off entirely, I will, but for now just getting them to accept > $96/mo is such a massive hassle that I don't bother. When my line of credit was paid off, the only "reward" I got from that was, "that's it?" I knew I still had that damn student loan, but there was little I could do about it for the reasons listed above. So I guess I just started living my life. Oh, and "paying off the highest interest first" and "paying off the smallest debt first" were the exact same thing for me, since my smallest debt was the credit card.