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Originally Posted by suaveflooder
PS- Most people who have made it would tell you to pay down your lowest debt first, regardless of interest rate. It's the idea of "seeing" things get paid off that gives people the ambition and will to get them attacking debt aggressively (budgeting REALLY comes in handy here). You pay on something that take some years to pay off, there is not a tangable success…you still have the payments. You knock out a $2000 credit card in a couple months, add that payment to your next biggest debt, you then pay that one off quicker, and roll both payments into the third biggest debt and so on. Sounds counterproductive, but have you ever heard of "snowballing" your debt? It works. I'm living proof of it. We paid our civic off 3 years early using this idea after paying off 5 credit cards!
I always suggest to my clients to "snowball" starting with their lowest debt and working to their highest. Learned this from Dave Ramsey a couple years ago and it has had amazing success. The calls are always fun when I have a client call me up telling me they just knocked out their third or fourth credit card.
(financial advisor here, by the way)
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That's a good point and something I hadn't really thought about.
The mental aspect is often the most important part. Make a few changes, get the ball rolling, and by the time it's all said and done, like a freight train roaring down the track.
I did the highest interest rate first, which I only had two and it worked out that the smallest debt had the highest rate. However, I went so far as to make a calendar as to when I should be debt free. Check it off every day and use it as a reminder to stay the course. When it was blank, the task looked daunting, as it started getting filled up, motivation increased and I worked even harder to pinch every penny and add to it, try to beat the deadline I had previously set. Made mistakes along the way, recently realized I had made a 10k mistake, but it wasn't through lack of effort, just because as I said before, didn't know better. I count it as a lesson and it won't happen again.
(not a financial planner, just a regular guy who doesn't want to be beholden to anything)