Comments on: How to Prioritize Your Debts for Payoff

By: Polly Poorhouse

Polly Poorhouse — Thu, 01 Jan 1970 00:00:00 +0000

Different priorities apply for different economic situations. Trying to pay down debt is different than trying to allocate payments when you don’t have enough to go around, like we did after a recent bought of unemployment. In that case, we prioritized:

1) Mortgage
2) Mortgage 2
3) Auto loan
4) Credit cards with a universal default clause or where a late payment would drive up an interest rate
5) Utility bills–usually no late penalties and a several month grace period before they threaten to shut you off.
6) Anybody else

Now that we’re able to meet our monthly obligations, at least with the minimum payments, my priorities for any extra (debt-reduction) payments are.

1) Credit cards with super high rates
2) Local payees we know (dance and piano teachers, for example)
3) Other credit cards.

I’d put my mortgage or any tax deductible interest like that on business loans at the very bottom of the list for prepaying.

Other than the local people we know, we prioritize based on interest rates.

By: Christopher

Christopher — Thu, 01 Jan 1970 00:00:00 +0000

You’re welcome. That debt calculator has helped me and I’m certain it can help your readers.

By: PT

PT — Thu, 01 Jan 1970 00:00:00 +0000

That’s pretty neat, Christopher. Thanks for sharing. Nice freebie.

By: Christopher

Christopher — Thu, 01 Jan 1970 00:00:00 +0000

I came across this debt calculator. It has some nice variables to see if its best to pay off the highest interest first, or the smallest balance, or some other variable. Good luck!

By: bunny

bunny — Thu, 01 Jan 1970 00:00:00 +0000

Wooo.. reminds me that I still have to pay of my student loan

By: PT

PT — Thu, 01 Jan 1970 00:00:00 +0000

@Rachel – Thanks. I wish I was in your shoes. We have more than we want, but are working toward being rid of it.

By: Rachel

Rachel — Thu, 01 Jan 1970 00:00:00 +0000

This is great advice. We don’t have a ton of debt outside of our mortgages, so I just keep track of it in my head. We usually pay off the few cards we have each month to avoid interest.

By: PT

PT — Thu, 01 Jan 1970 00:00:00 +0000

Thanks for your comments everyone. Seems there are a lot of passionate debt-reducers out there. Keep it up.

By: Christine

Christine — Thu, 01 Jan 1970 00:00:00 +0000

I am paying off my debt the Dave Ramsey way. I have all of my debts lined up from smallest to largest. I am paying them off that way with the snowball effect.

By: sara l

sara l — Thu, 01 Jan 1970 00:00:00 +0000

Technically I’m doing my debts in balance order. My car loans are about half of my student loans. The more important factor for me was choosing the loan that doesn’t have tax deductible interest.