Which Debt Should You Pay Off First?

Debt, much like Jean-Ralphio’s sister Mona-Lisa, is literally the worst.

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It sucks up your money, causes stress and can hurt things like your credit score. The worst! I know you want to pay off all your debt ASAP. When you have different kinds of debt though, which should be the first to go?

The number one thing you need to do when you decide to get serious about paying off all your debt is understanding what kind of debt you have. Not all debt is the same. It’s important to know how much you owe, where you owe it and what your interest rates are.

If you have only one kind of debt figuring out how to pay it off is fairly simple. If you have student loan debt in the form of three federal loans there are two common strategies to consider: paying off the highest interest loan first or paying off the lowest balance first. The first is called the debt avalanche method, the second is the debt snowball method. Decide which method would be most beneficial to you and go for it!

If you have multiple streams of debt things might seem a bit dicier. Say you have $5,000 in credit card debt, $20,000 in student loan debt and a car loan of $3,000. Total you have $28,000 worth of debt but which one do you tackle first? Where to start?

The dirty little secret I’ve got for you is that you should still follow either the avalanche method or the snowball method. Consumer debt like credit cards usually has a much higher interest rate than student loans. If you choose the avalanche method of paying off the highest interest debt first then you’re decision is made for you! You start with the credit card and when that’s done, take those payments and send them to the next highest interest rate debt. Easy as pie.

If you’re having trouble deciding which method is for you do a quick check in with yourself. Are you impatient to see progress? Will you feel more motivated to keep going once you see an entire loan wiped out? Then opt for the snowball method. Paying off the $3,000 car loan will happen faster than paying off the $5,000 in credit card debt. The success of that first payoff will keep you going!

If you’re someone who hates interest and stresses about the money lost to that, go with the avalanche method. You’ll save more money in the long term because you’ll pay less in interest overall. Knowing you’re saving money will motivate you to keep on keeping on.

You may feel panicked or out of control if you have debt coming at you from different areas. It’s important to stay calm and collected. Debt is not forever. Having a concrete plan to pay off your debt will help you feel less uneasy with the total load. Following through on your plan will keep you motivated. Seeing progress on debt payoff is so exciting! The more you pay off the more control you gain over your life. So come up with you game plan and stick to it!

Which debt do you plan to pay off first?



  1. I suppose I would go with the avalanche method. Currently, our only debt is our mortgage. I know some people argue that it is “good” debt with tax benefits and whatnot, but any debt makes my skin crawl. I suppose my biggest “mistake” was spending time with an early payoff calculator, and I realized how much money I could save if I paid it off aggressively. Now to find the means to do so!

    • Yes, I agree that there is no good debt, just make-your-skin-crawl debt! I also prefer avalanche because I always want to save as much money as possible on that interest. Good luck with the mortgage!

  2. The great thing is that if you’re doing this, you’re paying off debt, and above all that is the most important thing. I think the situation varies for each person based on their debt, income, goals, and everything else, but as long as you pay something down (and avoid adding more), you’re going to thank yourself no matter what.

    • You’re very right. Every dollar spent on debt is a favor to yourself. This is more of a guideline if you’re trying to really focus on on debt payoff and eliminate it all ASAP!

  3. Jean Ralphio was one of my favorite characters from Parks and Rec…so was his sister. Actually there were too many good characters on that show!

    I’ve basically always just paid off my highest interest loans first, the avalanche method. Though I did use the snowball method at times to pay off smaller loans (but I always picked the highest interest out of those ones).

    • Parks and Rec is absolute gold! One of my favorite shows. Avalanche is my preference too but sometimes snowball makes a lot of sense or helps with motivation. As long as you’re paying it off right?

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