Question

Trying to guide a friend with debt payoff. What order would you pay things? Store card with balance of ~$2300 (29% interest) over 10000 available credit on account Chase card with balance of ~$7000 (15% interest) 2000 available credit on account Home equity loan with balance of ~$65000 (6% interest) They said they have enough to pay $2500 now and anticipate $2000 a month to go towards debt. No other mortgage and student loans in deferrment. I think pay off the smallest with the amount available now and attach Chase card, then equity line - taking advantage of no car loan or student loans right now. Then attack equity line and then student loans. They think they should pay down the Chase because it's a higher debt owed to total credit versus the store card. They said they want to improve credit score and think paying chase down first sounds help faster. I think overall debt ratio of all debt matters more.  

Answer 1

What are the interest rates on all of them?  

Comments

I had to ask - 29% on store card, 15% on chase

Answer 2

I always heard pay off the smallest first which will be the quickest. Then you add that amount to what you’re paying on the next smallest and keep going.  

Answer 3

Get rid of the home equity loan first then the highest interest card.  

Answer 4

I would pay Chase! I bet they have a higher interest rate.  

Answer 5

Snowball for sure. Smallest to biggest. Those first two will be done super quick if they have 2k per month to throw at debt.  

Answer 6

1, 2, 3 just like you have it. Unlike the revolving debt the Home Equity loan is providing them a tax write off so the interest rate is of less importance

Answer 7

Do it in the order they are listed. The first one they have enough to pay off right away & is the highest interest. Paying that off first is the best choice by far

Answer 8

Pay it off starting with the smallest debt first to get a couple "wins" before getting to the bigger ones

Answer 9

Smallest to highest - and with the extra 2000 each month include the minimum payments for the cards already paid off . snowball method !