Do You put more money.........

iVillage Member
Registered: 03-27-2003
Do You put more money.........
14
Wed, 01-11-2006 - 9:15pm

towards the debt with the highest interest first or the one with the smallest balance?

Holly

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Avatar for skthurber
iVillage Member
Registered: 03-27-2003
Wed, 01-11-2006 - 9:45pm

I think that that is a personal preference. I like the smallest balance, as then I have the satisfaction of paying something off sooner. However, once I have a small balance paid off, I do like to throw some money at a medium balance with a killer interest rate. So, I guess I go back and forth, but I do like to have 1 thing paid before targeting the next thing.

-Sarah

Sarah


Mom to Gina & Tony


 


iVillage Member
Registered: 03-27-2003
Wed, 01-11-2006 - 9:45pm

I do the highest interest but I know debt experts are divided. Our biggest factor was that we had multiple debts at about the same amount so the argument that you would pay the smallest off very quickly and then have more to snowball didn't matter as much in our situation. But, we shifted the 2nd mortgage from 8.45 (I think) to a credit card with a 3.99 interest rate until the balance is paid off. Because that had been our target debt for over a year and both of us were so focused on paying it off we didn't shift to having another debt as our target.

Taleyna

Avatar for cl_phocid
iVillage Member
Registered: 03-26-2003
Wed, 01-11-2006 - 11:27pm

Holly - we decided that for us, we would pay the interest to the account that would give us the greatest satisfaction of paying it off.

All my best,
Danni

iVillage Member
Registered: 03-27-2003
Wed, 01-11-2006 - 11:33pm

Our biggest credit card debt is the highest interest.
I feel that I need to pay that first----I can't stand the interest. All of our other credit card debt are zero interest---but for a limited time!!

I don't know what to do now!!!

Holly

iVillage Member
Registered: 07-27-2005
Thu, 01-12-2006 - 12:23am

We are paying our credit card that has a ridiculously high interest rate first. Normally, I would pay off the smallest amount first because I like the idea of having the less numer of creditors but for us, mathamatically, we HAVE to get rid of the high interest card. I think it all depends on the kind of person you are.

Since your other cards are at 0%, I would definatly work on the high interest card.

Good Luck,
Cristin

Avatar for cl_phocid
iVillage Member
Registered: 03-26-2003
Thu, 01-12-2006 - 10:12am

Holly - don't get paralyzed with indecision.

All my best,
Danni

iVillage Member
Registered: 10-10-2005
Fri, 01-13-2006 - 1:31pm

I completely agree with the stupid tax thing. I figure I made the bed I'm lying in and I will deal with paying for it. And hopefully this will teach me a lesson that I needed to learn. Mainly, I can not handle having credit cards. I am keeping one for emergencies and such but that's only until I get my emergency fund built up.

I'm paying smallest balance to largest balance for a couple of reason. I hate having so many payments to make each month and so many debts to keep tract of. And I get a real sense of statisifaction from paying off one of my debts. My highest interest card is right in the middle so only two more cards to go before I pay it off. And it's neat to have one balance to focus on and get excited as it goes down.

So really it's just a personal decision, the most important thing is to pick one debt and focus on it.

Good luck with however you decide to handle your debt.

Avatar for mymartes
iVillage Member
Registered: 03-26-2003
Fri, 01-13-2006 - 5:47pm
I like paying the debt with the lowest balance. It makes me feel like I've accomplished something, and I'm one step closer to becoming debt free.
Avatar for endomagazine
iVillage Member
Registered: 11-09-2004
Sat, 01-14-2006 - 12:05am

Hello,

I have posted this before, but I use the following calculation:

Balance / Minimum Payment = # of Payments to Payoff

Example:
$2000 Balance / 20 Minimum Payment = 100 payments
$5000 Balance / 100 Minimum Payment = 50 payments

I choose the one with the smallest # of payments needed to pay it off, which isn't always the smallest balance, as the above info shows. This is obviously a rough estimate, but *most* of my credit card debt is currently on 0% APR cards, so I don't have to worry about the interest until January 2007. It is really nice to see those balances go down without interest taking out big chunks of the payment!

Sincerely,
Lindsey Schocke

Got Dot? Why Not? It Pays! Watch a 7 minute movie!
http://website.ws/runsamok/show

Sincerely,
Lindsey Schocke

Geeks on Tap: Mission Accomplished

iVillage Member
Registered: 05-09-2002
Sat, 01-14-2006 - 12:35pm
There is no method to my maddness - I do whatever I feel like at the time as long as I am doing something! I just started snowflaking, but plan to keep going. I have a doctor's bill of $75, an Express card with $45 left on it (from $950!) and a Capitol One card with $325 to go. And then the large cards and loans. I chose to pay a loan of $3083 as my snowflake and highest interest. Even though the others are smaller and close to gone, I need that one to be at $2999 to feel better! Once I break the $2k range on it, I will pay the smaller ones off. I like to see the emotional impact. Even though its not mathmatically the best plan, I am still paying it down so it doesn't really matter to me! Good luck.

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